ASIANA AIRLINES SUSTAINABILITY REPORT 2015

ASIANA AIRLINES SUSTAINABILITY REPORT 2015 ASIANA AIRLINES SUSTAINABILITY REPORT 2015 Overview 2015 Asiana Airlines Sustainability Report focuse...
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ASIANA AIRLINES SUSTAINABILITY REPORT 2015

ASIANA AIRLINES

SUSTAINABILITY REPORT

2015

Overview 2015 Asiana Airlines Sustainability Report focuses on major promotion policy and performances, diverse opinions of the stakeholders, media analysis which has induced significant issues. This report contains the performance of sustainability management activities that we achieved in 2014 with our passion and devotion. Reporting Period This report covers from January 1 to December 31, 2014 with some informations which had changed until August 2015. Reporting Scope This report includes major operational activities and performances at domestic business sites(the headquarters, hangars in Incheon and Gimpo, branches, etc), and overseas business sites for the passengers and cargos. Principles & External Assurance To assure reliability of the information herein, the Korea Productivity Center has offered external assurance in accordance with the validation standards of AA1000AS 2008, ISO 26000 and GRI G3 Guideline. Further Information Further information contained in this report can also be found in the business report which is included in the Electronic Disclosure System of the Financial Supervisory Service homepage(http://dart.fss.or.kr) and the Asiana Airlines homepage(http://flyasiana.com).

※ Company information such as corporate governance and financial structure is based on the statistics available as of December 2014. ※ The information can be subject to change after the publication of this report.

Asiana Airlines Sustainability Report 2015

CONTENT

04 CEO MESSAGE 06 Major Achievements In 2014

Company Overview 12 Introduction 14 GLOBAL NETWORK

Sustainability Management 18 Material Issue Identification 20 Sustainability Management 20 Structure 22 Sustainability Management 20 Organization 23 Win-Win Management 25 Ethics Management 26 Corporate Governance 28 Stakeholder Communication 28 Employee

Economic Value 36 Domestic and Foreign Market 36 Conditions 36 Passenger 41 Value Sharing of Stakeholders

Environment & Social Responsibility

42 Risk Management

60 Environment Management

42 Fair Trade

61 Climate Change Response

43 Disclosure

66 Environment Control

39 Cargo

69 Environmentally-Friendly Activities

Customer Satisfaction 46 Safety Management

70 Social Responsibility

49 Aviation Safety Support

APPENDIX

52 Service

77 Financial statements

54 Marketing

86 GRI G3.1 Index & Alignment with 86 ISO 26000

29 Fostering Human Resources

55 Customer Satisfaction 55 Management System

32 Safety and Health In Workplace

57 Awards

90 Organization Chart 91 Third-Party Assurance Report

CEO MESSAGE

All of us will do our best without stopping for sustainable growth and development First of all, I would like to convey my sincere appreciation to our stakeholders for continued affection and trust. In the last year, we were able to reinforce our core competency and competitiveness under the motto of ‘new Kumho Asiana’. These achievements were made possible because of the passion and unwavering focus which we learned in our early years. We chose ‘Flawless Operational Safety’ and ‘Regaining Customer Trust’ as our top priorities because safety and service are Asiana Airlines’ highest goals. We’ve made improvements in flight training system and maintenance quality system to reinforce our general safety systems. Aisana Airlines has introduced A380, the next generation cutting-edge aircraft, to provide convenience for customers and put them into lA flights. In order to reinforce the competitiveness of long-haul flights, we expanded Paris and Istanbul flights. Furthermore, we added more flights to Guangzhou, yanji and Shenzhen to take the dominance as a leading carrier in the Chinese market. Asiana Airlines has laid the groundwork for sustainability with the revitalization of organizational culture. ‘Smile brings blessings’ campaign, the meeting between executives and staffers which leads to frank exchanges of opinions, has given us the sense of belonging and strong bond by tearing down the walls between positions. Asiana Airlines is going to fulfill the management policy of the last year, new Kumho Asiana, in 2015 and will try its best to be a reliable and beautiful company under the new motto “Strengthen Self without Stopping”. That means we are ready to stand as one and work tirelessly for the steady development and growth of the company. In addition to the safety and service items we have already promoted, an integrated safety information system will be built and bold investment for hi-tech operation equipment will be made to continuously strengthen the infrastructure for safety. This will also enhance the foundation for bringing about the awareness of safety issues. In order to reinforce our competitiveness through the latest aircraft, we confirmed the plan to introduce A350XWb and A321 nEO. We hope this will help build up the foundation for future growth. This year, we will put additional A380s into new york flights and will start a new flight to Rome to reinforce our competitiveness in long-haul flight. Also, we will speed up the plan to add our strategic air routes in China and other Asian countries. Asiana Airlines hopes to become a company that contributes to the nation and society by social and environmental activities. We are going to take responsibility for social and environmental issues with persistence and sincerity. One of such efforts is the ‘unICEF Spare Coin Collection’ which we has been working with the Korean Committee for unICEF (united nations Children’s Fund). In the last year, the accumulated amount of money has exceeded 10 billion won. This fundraising campaign will be continued for the benefit of underprivileged children. There are also other activities and campaigns to promote corporate responsibility such as ‘Social Work Volunteering In Relay’, ‘beautiful Classroom’ in China, tree planting events on the reclaimed lands near metropolitan areas and various environmental activities to reduce greenhouse gases. In retrospect, Asiana Airlines has grown and evolved thanks to our stakeholders’ continuous affection and support. We will make utmost efforts to raise the corporate value to the best in the business and to be a ‘beautiful Company’who is willing to take the social responsibilities by raising awareness of safety issues and differentiating the services with distinct ideas. We hope all our stakeholders will favor us with supports and expectations. Thank you. Soo Cheon, Kim President & CEO

2 014 A S I A N A ’ S F O C U S

6

Main Achievements In 2014 Strategic network Management ● Creating Competitiveness ○ Reinforce the competitiveness for large aircraft and premium service by introducing A380 ○ Increase the efficiency of small aircraft → Reinforce the competitiveness for short-haul flights ○ Preparations for the changeover to a new fleet(with new types of airplanes) from 2017 on

● Network Reinforcement ○ Passenger

• new Flights : Jinan(2 times per week), barcelona(between May and June), Irregular Flights to Venice(between July and September) • Increased Flights : Guangzhou(10 times per week → 14 times per week), Shenzhen(4 times per week → 7 times per week), yanji(5 times per week → 7 times per week), Shenyang(3 times per week → 4 times per week), Paris(4 times per week → 5 times per week), Istanbul(4 times per week → 5 times per week), Hanoi (11 times per week → 14 times per week) ○ Cargo

• Expanded Flights : Hanoi(6 times per week → 7 times per week), narita (2 times per week → 3 times per week) • Extended Flight networks : Interline(2 more companies) • Flexible Flight Operations : Hanoi(7 times per week ↔ 5 times per week)

Responsiveness to the Market & IT based Management ● Creating Competitiveness ○ build the integrated management system for seats and fares ○ build the integrated management system for seats and fares Reinforcement of profitability management (expertise, effectiveness) ○ Increase profits by wet leasing u.S. lines during the peak seasons for cargo transportation ○ Make contracts with more GPA(Global Partnership Agreement) partners : 12 companies in 2013 → 13 companies in 2014 ○ Detailed classification of cargo RM(Revenue Management) Class

● Diversification of Marketing ○ Expand the foundation of foreign market ○ K-POP Marketing : Increase our brand recognition to the fans of the Korean Wave (Sponsoring for the Korean Wave concerts) ○ Expanded Participations for younger Generation Dream Wings Flying Marketer

(College Students) back up the dreams and passion → Elevate the corporate image (Elementary, middle and high school students) Running hands-on programs by age → Increase friendliness and preference (Customers in their 20s) Produce and spread online promotion contents

○ Increased supply of E-Commerce : An increase of 40% from 2013 ○ Increased amount of mail order retailing supply (Germany, China, Singapore, belgium)

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Asiana Airlines Sustainability Report 2015

● Reinforcement of IT Sales Fundamentals ○ Open Altea customer management system and build an airport system

Improvement of airport automation service(Self check-in automatic ticketing system[KIOSK] usage rate : 17%(2013) → 25%(2014)) ○ build overseas online infrastructures (China, Europe, Southeast Asia,

Oceania, CIS → Real-time ticketing on the internet) ○ CRM(Customer Relationship Management) system construction

• Establishing the integrated management and analysis system for customer information

Safety and Service Reinforcement ● Safety Reinforcement ○ Reinforcement of flight training system

• Special Simulator training for all the flight crews (Evaluation and special education included) • Increase instructor's turnout during flight training • Develope and introduce a new training system(EbT : Evidence based Training) ○ Improvement of Maintenance Reliability

• Reinforce the technical support for foreign airports (build real-time wired and wireless communication system) • Develop techniques to repair core parts of airplanes and engines • Acquiring a certification of international standard for maintenance system(EASA[Europe]) ○ Reinforcement of cargo safety

• Reinforce the transport process of lithium batteries (not allowed in any aircraft and routes) • Reinforce the transport process of animals(Rodents are not allowed in any aircraft and routes) • Reinforce loading checkup steps (loading machine operators → load controllers → cockpit crews)

● Service Reinforcement ○ Differentiate and stabilize the A380 services

• Develope in-flight fast menus, Specialty services (barista, sommelier) • Improve Service process and facilities, Supply new items (Improve comfort wears and Slippers etc.) ○ Improve service by service quality monitoring and coaching

• Run cabin service monitoring committee and auditor • Carry out overseas airport service coaching : 10 branch offices in Southeast Asia ○ Reinforce customer guidance services(utilize SnSs etc.)

• Offer the information about A380, Improve in flight meals, Offer Mobile check in

2 014 A S I A N A ’ S F O C U S

Reinforcement of Sustainability Management ● Nurture and recruitment of power ○ Foster A380 flight crews and confirmation mechanic ○ Provide engine maintenance experts

● Activation of Organizations ○ Fortune comes to a merry home(28 times of unreserved meetings with Executives) ○ All for One Program(build trust and understanding between departments and levels. 8 times a year) ○ Positive Communication Process, Culture Travel of OZ

● Financial Structure Improvement ○ Raise manpower efficiency through process improvement ○ Maintenance engineering activities → Switch over to self repairing system ○ Secure natural hedge and long-term liquidity through diversification of currency borrowing

● Introduction of Aircraft ○ Two A380-800s, an A330-300 and two A321-200s

● Reinforcement of Advertisement and Promotion ○ Promote and advertise the A380 by steps ○ Customer participation(Two-Way) promotion : ‘Fly to’ campaign ○ Raise preference for the company by inserting PPls in major variety programs, dramas, education programs on TV

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Asiana Airlines Sustainability Report 2015

● Improvement of Corporate Image ○ Environmentally-Friendly Activities

• Tree planting activities on the world’s largest landfill • Chosen as the best airline company by DJSI for six consecutive years • Raise Environmentally-friendly image : Incheon-lA flight was selected as a Green product of the year for five consecutive years ○ Social Contribution in Overseas

• Installation of 26 Environmentally-friendly solar-powered streetlights (Istiqlal Mosque in Jakarta) • beautiful Class Project has been completed in China (21 schools in 3 years) ○ Operating a talent donation group

• Service group (114 persons), Attendees(45,000 persons in 420 classes) ○ Safety equipments trial

• Hands-on experience of safety equipments with customers • Safety training experience programs for overseas councils ○ Coin collection in the airplane for the unICEF

• The collection for charity has reached to over 10 billion KRW since 1994

56,381 54,633

55,526 Sales(KRW 100M)

1,325

● Sales and Operating Profits

422 - 615

2012

32,870

4,209

2013

34,523

4,062

Operating Profits (KRW 100M)

2014

37,036 Passenger (1M Passenger KM)

4,000 Cargo (1M ton KM)

2012

2013

Sales and Transport Performance

2014

Classification

2012

Sales(KRW 100M) Operating Profits(KRW 100M)

56,381 1,325

2013 54,633 -615

2014 55,526 422

● Transport Performance Classification

2012

2013

2014

Passenger(1M Passenger KM) Cargo (1M ton KM)

32,870 4,209

34,523 4,062

37,036 4,000

INTRODUCTION

12 Introduction 14 Global Network

Asiana Airlines will fly up into the beautiful future with our customers with the spirit of “Strengthen self without stopping.” ✽Strengthen self without stopping: strive for oneself with unceasing effort

INTRODUCTION

12

Company Overview Management Philosophy and Business Credo Asiana Airlines actually fulfilled the management policy of the year, new Kumho Asiana, in 2014. In 2015, we are trying our best to be a strong and beautiful company under the new motto, “Strengthen Self without Stopping.” Company Name Asiana Airlines Inc.

Business Credo

Company philosophy

Customer satisfaction through maximum safety and the best service

The safest, fastest and most comfortable flight to the destination on time

Date of Establishment Address

Gonghang-ro 94-1 Gangseo-gut, Seoul, Korea (Gimpo Hangar)

Business

Air Transport

Revenue

KRW 5 trillion 552 billion 678 million

Employees Job creation for communities and rationality-based management

Asiana Town, 443-83, Ojeong-ro, Gangseo-gu, Seoul, Korea (headquarters)

272, Gonghang-ro, Jung-gu, Incheon, Korea (Incheon Hangar) President & CEO Soo Cheon, Kim(金秀天)

EBIT

Management Philosophy

Feb. 17, 1988

KRW 42 billion 228 million 10,380 persons (as of April 30, 2015)

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Asiana Airlines Sustainability Report 2015

Aircraft Fleet A total of 5 aircrafts(two A380-800s, an A330-300 and two A321-200s) have been newly introduced in 2014. The aircraft fleet operated by Asiana Airlines at the end of 2014 consisted of 84 aircrafts(73 Passenger Aircrafts and 11 Cargo Aircrafts) in total. In 2015, we are planning to introduce four aircrafts (two A380-800s and two A321-200s). under a medium and longterm perspective, we have a plan to introduce 30 A350XWbs(from 2017 to 2025) and 25 A321nEOs(from 2019 to 2025). Aircraft Type

Passenger Aircrafts

The Numbers of Aircrafts

Aircraft Type

The Numbers of Aircrafts

A320-200

8

b767-300F

1

A321-100

2

b747-400F

4

A321-200

23

b747-400SF

6

A330-300

15

Subtotal

11

A380-800

2

b767-300

7

b777-200ER

12

b747-400C

2

b747-400P

2

Subtotal

73

Total

Cargo Aircrafts

84

INTRODUCTION

Global network (as of September 1, 2015)

○ 355 Domestic flights per week on 11 routes to 11 cities ○ 656 international passenger flights per week on 91 routes to 77 cities in 25 countries ○ 70 international cargo flights per week on 25 routes to 28 cities in 12 countries

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Asiana Airlines Sustainability Report 2015

Star Alliance The Star Alliance is the largest global airline alliance(28 Airlines) that connects 1,330 airports in 192 countries and operates 18,500 flights a day as of September 1, 2015. Star Alliance members offer a range of high-quality customer services such as priority booking and standby, exclusive check-in counter, the frequent flier program, the rights to use about 1,000 airport lounges across the globe, one-stop check-in service and priority baggage check.

S U STA I N A B I L I T Y D E V E LO P M E N T

18 Material Issue Identification 20 Sustainability Management Structure 22 Sustainability Management Organization 23 Win-Win Management 25 Ethics Management 26 Corporate Governance 28 Stakeholder Communication 28 Employee 29 Fostering Human Resources 32 Safety and Health In Workplace

Asiana Airlines will enhance the company’s prestige to THE WORlD bEST by creating premium corporate value.

S U S TA I N A B I L I T Y D E V E L O P M E N T

Material Issue Identification

18

Material Issue Identification Process Through the following process, Asiana Airlines has conducted analysis to identify material issues to be included in 2015 Sustainability Report. Especially, we have induced the material issues which have a influences on Asiana Airlines' sustainability management and put them into the report.

Significance Assessment

Step3 Step2

Step1 Stakeholder Issue Identification Aisiana Airlines organized an issue pool to pick out the material issues

Significance Evaluation We evaluated the issues identified from the issue pool in step 1. Relevance(degree of correlation with sustainability management) and impact(effects to the sustainability management) were taken into account.

Material Issue Selection Material issues were selected through Significance Evaluation. The contents of the 2015 Asiana Airlines sustainability report are centered on the selected material issues.

◦ Identification Methods of the Material Issue Pool

• Media Analysis Asiana Airlines has analyzed a total of 1,270 articles and press reports published from January 2014 to May 2015 to identify relevant issues that help us find out the public’s perception of the company and material sustainability issues. • International Standards Analysis GRI G3.1, ISO26000, etc. • Relevant Company Analysis Asiana Airlines has analyzed sustainability management strategies, reported issues and success cases based on the reports published by relevant companies home and abroad. • Internal Policy and Document Analysis Confirmation and analysis of Asiana Airlines' strategy, policy, major activities and performance in 2014 • The Survey of Stakeholders ① External Stakeholders Asiana Airlines conducted the survey to understand external stakeholder interest per issue and to pick out sustainability issues. A total of 150 respondents participated in the survey and the results were studied to derive 38 issues of relevance. ②Internal Stakeholders

An additional internal employee survey has been conducted on the issues of relevance derived from media research and external survey to use the results as the basis for significance assessment.

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Asiana Airlines Sustainability Report 2015

◦ Significance Assessment Matrix 14

12.25

business Relevance

10.5

8.75

3

8.1

9.2

10.3

11.4

12.5

Stakeholder Impact

No. 1 2

3

4 5 6 7 8 9 10 11 12

13

14 15 16 17 18 19 20 21 22 23

Issues Perfect Safety Operation Improvement of service quality for customer satisfaction (ex. Enhancement of the entertainment function, Differentiated service) Corporate reputation management (ex. Advanced brand promotion and marketing) Social contribution that reflect the characteristic of business (ex. Education donation - Field trip to observe an airplane, lectures on the principle of flying, maintenance engineer’s lecture on the job) Promotion of the communication with customers (utilization of SnS, Resolving customer complaints and disputes) Interactive corporate culture (Grievance Redress Committee, Joint mountaineering) Health care for the employees Disclosure of management activities for corporate transparency Investment for aircrafts and facilities Inspection for safety management, sophistication of the system Securing the work-life balance of the employees(ex. Family-friendly management) Climate change response Global social contribution that meets the local needs Employment creation, Talent recruitment Fairness in partner company selection, Transparency in partner company evaluation Increase the use of eco-friendly aircrafts and equipments Sophistication of ethics management practice system Fairness in achievement evaluation, Reasonable reward Global network expansion (ex. MOu, strategic partnership) Supporting the capacity building of partner companies Observance of environmental laws, Taking measures against restriction (ex. Carbon emission trading) Fair and balanced competition (ex. prohibition of price rigging and monopolization) Educations for the employees' capacity building Advanced risk control for financial and non-financial management Reinforcing the soundness of corporate governance Activation of the employees’ social contribution (ex. Donation and Voluntary service) continuous communications with partner companies Securing the new growth engines (Preparing for the budget airlines) Educations for accident prevention and simulation drill reinforcement Reinforcement of the protection for the customer’s personal data

Significance 11.9 11.5 11.3 11.3 11.2 11.0 10.6 10.4 10.2 10.2 10.1 10.1 9.9 9.7 9.7 9.5 9.3 9.3 9.3 9.3 9.1 9.0 8.8 7.9 7.8 7.4 6.1 5.8 5.6 5.0

S U S TA I N A B I L I T Y D E V E L O P M E N T

Sustainability Management Structure

Asiana Airlines’ sustainability management structure is organized on the basis of the new Values of Kumho Asiana Group. Mission

Strategy

Mission

▶ Improving the quality of life all of Asiana Airline stakeholders

Vision

▶ A beautiful corporation creating the highest corporate value ▶ in each related industry

Strategy

▶ Four core management principles - Strategic Management, ▶ Human Resources Management, Ethical Management, ▶ Quality Management

Spirit

▶ Passion and Tenacity

Right People

▶ Sincere and Diligent, Studious and Earnest and Driven

leadership

▶ Taking the Initiative and leading by Example, Judgment, ▶ Decisiveness, Drive

Culture

▶ An open community where order freedom co-exist in harmony

Vision

Asiana Airlines new Values

Spirit

Right People

Culture

20

Leadership

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Asiana Airlines Sustainability Report 2015

Vision - A beautiful corporation that creates the best values in the industry Vision -

Beautiful Corporation Together with Employees

Trusted by Customers

A workplace whose employees are satisfied with their work and pleased to be a member. A company that is run in partnership with the employees those who set themselves to fulfill their common missions and visions

Contribute to Public Welfare Beautiful People

Work together with all employees in the journey toward achieving Asiana vision and mission

Exert one's best for the assigned job with passion and devotion

Fulfill corporate social Provide only the best responsibilities service, quality and technology to customers, keep promises made to customers to gain their trust

Mission - Enhance life quality of stakeholders ◦ Disclose business information in a transparent ◦ manner and have active communication ◦ Create future values for sustainable ◦ growth of the company ◦ Provide the best service and act on our ◦ promises for maximum customer satisfaction

◦ Identify potential partners with competitive ◦ edge and grow together to maximize our ◦ competitiveness in service and quality

◦ Act consistently, assure quality and undertake ◦ business in a responsible manner ◦ to build trust

◦ Reinforce win-win partnership through ◦ active communication and idea sharing

Shareholders er tom s Cu

P Co artn mp er an y

Employee

Society

Improving the quality of life all of Asiana Airline stakeholders ◦ Engage both employees and customers ◦ in proactive outreach campaigns to create ◦ a ‘beautiful World’ ◦ Develop employee talents from the thought ◦ that humans are the core assets of the company * Talent Management : Train and manage the best and the * brightest who can represent corporate values

◦ Grow into a ‘beautiful Company’ that fulfills ◦ its social responsibility by carrying out ◦ initiatives based on objectives such as ◦ education donation, culture of sharing, ◦ eco-friendly management

S U S TA I N A B I L I T Y D E V E L O P M E N T

Sustainability Management Organization

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Organization CEO Financial Affairs, Environment, Education Corporate Support Dept.

Passenger · Cargo (Sales/Service)

Safety(Flight/On the Ground) Safety & Security Management, Flight Operations, Maintenance & Engineering, Operations Control

Cabin Service

Cabin Service Dept.

Passenger business Dept. Cargo business Dept.

Strategic Planning, External Cooperation, Social Contribution Strategic Planning Dept.

Domestic & Overseas Branches Passenger business Dept. Cargo business Dept.

◦ Major Committees Name

Meeting Frequency

labor Management Council

Quarterly

• Discuss how to induce collaboration and improvement for working conditions, • benefits, health, welfare

Safety & Security Review board

Monthly

• Review the company ’s safety functions from a strategic perspective, and verify • whether sufficient resources are adequately allocated • Monitor safety performance of the safety policy, safety objectives and the • effectiveness of Safety Management System(SMS)

Major Tasks

Customer Satisfaction Semi-annual, • Share service quality issues and the present actual conditions. Discuss the Improvement Committee ad hoc • controversial customer service issues and draw the improvements Internal Council for Joint Growth

Monthly

• Prevent unfair business deals and establish a self-regulated monitoring system · • Check the details on the joint growth promotion and discuss the direction of progress

Fuel Management Committee

Monthly

• Review results of energy-saving initiatives and generate plans • Develop new ways for energy saving, analyze statistics

Occupational Safety & Health Committee

Quarterly

• Develop plans to improve safety and health and prevent occupational accidents • Analyze the cause of industrial accidents and take measures against recurrence

Environment Committee

Annual

• Define targets in environment aspect and set specific goals • Discuss material issues and define plans to enhance the environment

◦ Sustainability Management Activities

2012

2013

2014

• Signed an MOu with unESCO Korea for • world heritage preservation • Raised KRW 7 billion for its spare coin • collection initiative • Accredited to offer educational outreach • initiatives • Airline of the year(Premier Traveler) • no. 1 in KCSI aviation service for 2012 • no. 1 Airline in 2012 KS-SQI • named the leader of air transport • industry by DJSI Korea (4 consecutive years) • Grand Awards for Excellence in • Sustainable Management (Ministry of • Knowledge Economy) • Grand Award for Family-Friendly • Management • Grand Award for Transparent • Management selected by 5 major • economic associations

• Awarded in China for excellent in-flight • service • named no. 1 ‘Good Airline’ • Fund raised by collecting spare coins • exceeded KRW 8.5 billion • named the best airline in fuel efficiency • no. 1 in nCSI • World Airline Award (best employee • service, best in-flight meal service for • economy passengers) by Skytrax • built its own power generation system to • prevent blackout • no. 1 in 2013 KS-SQI • Completed the construction of the 2nd • hangar in Incheon • Introduced the next generation • passenger system • named the leader of air transport • industry by DJSI Korea (5 consecutive years)

• Introduced A380 Special Edition(for the • second time) • Fund raised by collecting spare coins • exceeded KRW 10 billion • named no. 1 in Customer Satisfaction • by KCSI, nCSI and KS-SQI • Awarded as the world best customer • service and in-flight service (business • Traveler) • Awarded as the best in-flight service and • the best flight attendants (Global Traveler) • Grand Award for Marketing(2014 Travel • business Awards in China) • named the leader of air transport industry • by DJSI Korea (6 consecutive years) • named Green Product of the year • (Incheon - lA flight) • built a world standard systems for • reservation, ticketing and transport

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Win-Win Management

Asiana Airlines Sustainability Report 2015

Vision “Marching toward a beautiful future with Partners” is the win-win management vision

that Asiana Airlines has established. We have been trying to maximize service and quality competitiveness by identifying and developing partners with competitive edge. The results have been shared fairly through partnership. building an infrastructure for win-win management, cultivating good partners, interactive communications, supporting for partner companies are some of our efforts to reinforce the partnership.

Operation Program Division Win-Win Infrastructure building

Program • Operate AVEPS(Asiana Value Enhancement Purchasing System) • Agreement for fair trade and joint growth (Fair Trade Commission) • Establish and spread the ethical principle for purchase

• Partner assessment Cultivating Good Partners • Good partner grading system(Compensation based on evaluation grades, Support for events • and education) • Win-win meeting with partners Interactive Communications Support for Partners

• Day for partner communication • Grievance redress and suggestion for good practices, Surveys for partners on • Ethics Management satisfaction • 100% cash payment, Cyber foreign language course, Membership to use culture center contents

Partner Management System ◦ Partner Selection

The purchase system of Asiana Airlines consists of Requisition Department(Request and review the procurement), budget Management Department(Review and approve the budget) and Procurement Department(Conduct real procurement and payment). When selecting partners, we observe the procurement guideline to ensure the detailed information on transparent and fair procurement process. Process to Ensure Fair Procurement

Purchase Decision

Purchase Request

■ Compile requisitions for needed materials

■ Submit purchase requests

■ Finalize specifications and needs for materials based on relevant policy

to Purchase Department (AVEPS)

Partner Selection ■ General competitive bidding ■ Restricted competitive bidding ■ Designated competitive bidding ■ Private contract

The process guides purchasing department to select the most optimum partners in consideration of price, quality, deadline management, follow-up measures, good practices, recommendation by relevant departments and environmental footprints of their products.

S U S TA I N A B I L I T Y D E V E L O P M E N T

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◦ Partner Evaluation and Good Partner Program

Asiana Airlines assigns 30% weight to the corporate evaluation result and 70% weight to product/transaction evaluation result when assessing partners, and defines evaluation items under such standards. Corporate assessment looks at management environment and operational capability of a partner for the transaction, and product/transaction assessment has criteria such as price, quality, service, shipment, deadline observance, and inventory management.

Fair Transaction and Win-Win Growth Agreement On July 10, 2013, Asiana Airlines held a conference for partners where we announced the win-win statement, signing a fair transaction and win-win growth agreement with partners. Afterwards, we have been establishing an autonomous fair transaction system by setting up a contract guideline and a partner selection & application guideline. We also established an internal deliberation committee and introduced a standard contract document following the guideline of the Fair Trade Commission.

Internal Deliberation Committee for Joint Growth Internal Deliberation Committee for Joint Growth has been established to prevent unfair trade practices and introduce a voluntary monitoring system. The committee reviews implementation and progress of joint growth plans and discuss how to drive it further. Internal Deliberation Committee consists of a chairman(a procurement executive) and a secretary(a win-win cooperation team leader), two standing committee members and two temporary committee members.

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Ethics Management

Asiana Airlines Sustainability Report 2015

Organization Asiana Airlines is running an Ethics Audit Office(Ethics Audit Team) under the direct control of the CEO to fully implement ethical management.

Implementation Plan Establish ‘beautiful Culture’ Develop new Values for Kumho Asiana Maximize business Efficiency

▲ Establish Transparent Management Prevent Fraud • Error or Accident

Fraud Risk Management

Audit Planning and Execution

Stronger Employee Ethics

• Improve the audit manual and auditing skills • build fraud/corruption monitoring system • build on-going monitoring system

• Plan and execute with a focus on risk management • Monitor compliance with relevant rules • Enhance work efficiency by conducting periodic audits

• Extend ethical management education for employees • Conduct ethics surveys and campaigns • Develop employee education program

Practice Program ◦ Ethics Management Education

We are inspiring employees to aware the Ethics Management by providing various ethics management educations(cyber ethics management education, ethics management education on duty educations or promotion educations) Especially, we are providing intensive ethics management educations for new employees and executives. Ethics Management Education Results Division

General Sales Airport Maintenance

Cabin

Procurement

Operation (Pilot etc)

Educated Persons

312

208

105

73

Ethics Management Campaign Asiana Airlines has waged a self regulating campaign that bans employees from receiving money or gifts offered by business partners to establish the Ethics Management. We have held a total of 25 campaigns until 2015. During the campaign period, we regularly invite partner companies to relay our messages and hold a rally to promote ethics management. Starting from 2013, Asiana Airlines has launched campaigns that bans employees from receiving money for their lifecycle events (e.g. a funeral, a wedding, giving birth to a child, etc) from business partners.

S U S TA I N A B I L I T Y D E V E L O P M E N T

26

Ethics Management Homepage Ethics Management Homepage, which has been created for real time monitoring on whether the employees are following the ethics management(social contribution activities included) regulations, consists of three sections(Ethics Management, Social Contribution, Cyber Ethics Managements center). We improved the accessibility by placing the banners, made from stakeholders’ opinions and tip-offs, onto the top of the page.

Corporate Governance

Shareholder Status Name

30.08

① unit %

12.61

④ 51.06



Equity Stake(%)

Owned Shares

① Kumho Industry

30.08

58,688,063

② Kumho Petrochemical

12.61

24,593,400

③ Korea Development bank

6.25

12,200,000

④ Others

51.06

99,619,902



6.25

The Composition of Board of Directors Type

Name Park Sam-Koo

Inside Director

Outside Director

Kim Soo-Cheon

Role

Work Scope

Overall business Supervise business management management

Recommended by

board of Directors

Note CEO(appointed on March 27 ’ 14)

Seo Jae-Hwan

Supervise external affairs

Han Chang-Soo

Supervise business management and external affairs

Finance, etc

Overall business management

Im In-Taek

Aviation & transport expert

Aviation industry advisor

Reappointed on March 31 ’ 15

Jeong Chang-young

Economy expert

Economic advisor

lee Seong-Geun

legal expert

legal advisor

Financial expert

Financial advisor

Jeong Gun-yong Kim Jong-Chang

External affairs

Appointed on March 29 ’13

Reappointed on March 27 ’ 14 Outside Director Recommendation Reappointed on March 29 ’ 13 Committee Reappointed on March 27 ’ 14 Appointed on March 29 ’ 13

Board of Directors Outside Director Recommendation Committee (3 Persons) • Purpose/Authority:Recommend outside director candidates • Chairman(Inside Director): Soo cheon Kim

Audit Committee(3 Persons) • Purpose/Authority: Audit the Management of Internal Accounting Control System • Chairman(Outside Director):In taek Im

27

Asiana Airlines Sustainability Report 2015

Independence of Directors Candidates recommended by the board of directors(for inside directorship) or Outside Director Recommendation Committee(for outside directorship) must receive unanimous support from the board of directors, and biographical information of the candidates is disclosed to both shareholders and other stakeholders before a general shareholders ’ meeting in compliance with applicable laws. ◦ Major Agendas in 2014 : A total of 18 board of director meetings An approval for the financial statement of closing account on the 26th general shareholders’ meeting ▶ ’14.2.6

An approval for the establishment and management of the life-long learning center on the 2nd hangar in Incheon

Agreements on a bond trust of air cargo fare and asset-backed loans transactions

▶ ’14.7.17

▶’14.5.8

▶ ’14.10.6

’14.12.19

Extension of foreign currency loans funded by Korea Finance Corporation for facility addition

An approval for signing a financial agreement backed by Export-Import bank of Europe for one A380

Executive Compensation Status of the Compensations for Directors and Auditors Total Compensations

< unit: KRW 1K >

Type

Persons

Registered Directors

4

1,291,550

Average Compensation per Director 321,887

Outside Directors

5

252,000

48,000

Members of the Audit Committee or Auditors

3

156,000

48,000

Total

9

1,543,550

171,506

note) 1. Only the inside directors were marked as registered directors. All the three members of the Audit Committee are outside directors. The ‘Total’ note) above is a total of the registered directors(inside directors + outside directors). note) 2. The ‘Total Compensations’ is an accumulated payment until the end of that quarter. The average payment per registered director has been calculated note) simply by dividing the total payment with the number of registered directors. note) 3. The average payment per outside director or member of the Audit Committee or Auditor has been calculated in consideration of the numbers of note) retired/newly appointed directors during the disclosed period. note) 4. no stock option

Committees under the Board of Directors Purpose of Establishment

Composition

Note

Outside Director Recommendation Committee

Division

Recommend outside directors

2 outside directors 1 inside director

1 chairman 2 members

Audit Committee

Audit the inside account management etc.

3 outside directors

1 chairman 2 members

S U S TA I N A B I L I T Y D E V E L O P M E N T

Stakeholder Communication

28

Customer Satisfaction Improvement Committee, service quality monitoring Voice of Customer management system customer satisfaction survey, global talent growth project

IR Meeting & Conference, Investor conference, disclosure, annual report

Shareholder & Investor

Policy discussion regarding air transport. collaboration for domestic/foreign information exchange Domestic and foreign issue discussion, Aviation or other relevant councils

Government & Relevant Agency

Customer

Partner Employee

Telepia(corporate reporting and approval system), various employee engagement programs, corporate newsletters English brakers/In the Cabin(cabin members). club activities, internal councils

Win-win growth meetings, Roundtable meetings with supplier CEOs Internal Deliberation Committee for Joint Growth, labor consulting, Partners’ Day AVEPS(Procurement Portal System), information/idea sharing

Environment &

Society Green Corporate Council, activities for domestic and foreign councils, partnership with the government beautiful Sharing(1 Company 1 Village, unICEF spare coin collection), beautiful Classroom(education donation, beautiful Classroom initiative in China), beautiful Culture(Asiana International Short Film Festival, art sponsorship)

Employees

Employees Status The total number of employees is 10,138 and the ratio of female employees is 54.8%.

Employees by geographies

Oceania 14 Asia 318 Europe 118 China 356 Japan 191 America 253

< unit: persons >

Korea 8,888 Total 10,138

< unit: persons >

Employee Composition

2010

2011

2012

2013

2014

Male

3,910

4,112

4,356

4,485

4,583

Female

4,670

4,961

5,239

5,461

5,555

Total

8,580

9,073

9,595

9,946

10,138

Female Share

54.4%

54.7%

54.6%

54.9%

54.8%

note) 1. 10,380 persons (Male: 4,649 / Female: 5,731 / as of April 30, ’15) note) 2. the average length of service: about 10 years

(as of Dec 31, ’14)

Manpower Index(New Hiring, Career Change etc.) New Hiring

Retirement & Discharge

Physically Challenged

new Hires : 829 people 637 people(those leaving for other companies after resignation:6.3%)

72 people

Manpower Index(Female Managers, Temporary Staffs) Female Managers 2 Executives

5 Team leader 26 Part leader 2 Executives

148 Group leader

180 Cabin Manager Total : 361

Temporary Staffs 153 Office

122 Flight Operation

267 Cabin

Total : 598

82 Maintenance

29

Talent Growth

Asiana Airlines Sustainability Report 2015

Vision and Strategy Fostering global leaders for creating future values and outcomes Enhance global and creative capability, Foster an organizational culture of communication and fusion, Create learning environment in the workplace

Vision

Purpose of Education

Strategy

Initiatives Stronger global capability, Innovative corporate culture, Performance improvement

Establish leadership education system Reinforce communication program, Smart learning Grow key talents and experts, Introduce more family program Foster Infrastructure and culture, Improved global capability

Career Development Program

When hiring and positioning the employees, Asiana Airlines secures adaptability, expertise and stability by reflecting their wills. We are running a Career Development Program to recruit talented people.

• Duty-centered career development • Judge the conformity between the • capability needed from the • duty and personal capability, • develop necessary capability

Duty/ CapabilityCentered Development

Systematic Career Development

• Develop the career by • configured career path • Provide opportunities • based on the career • development system

Career Development Inspection and Modification

• update the career plan annually after testing • Manage the progress of practice issues

Talent Growth System Asiana Airlines is reinforcing the global capability education by hierarchical education(centers on the leadership pipeline of the job hierarchy), the nurture of key talents and the cultivation of the next generation leaders. basic education by position consists of essential hierarchy education, duty expertise education and organization activation education. Advanced education consists of Capability Development Class and Key Talent Class.

S U S TA I N A B I L I T Y D E V E L O P M E N T

30

The status of Employee Education Training Expense Classification

Unit

2012

2013

Total Expense

KRW 100 million

128

138

2014 138

Per Capita Expense(Full-Time Worker)

KRW 1,000

1,498

1,501

1,563

Education Expense to Sales Ratio

%

0.23%

0.25%

0.25%

Major Specialized Programs Course CS Consulting Outsourced Training for Partners

Description Service training to help employees understand customer service and service-oriented mindset Outsourced training to improve job capability of partner companies

Foreign language and Culture Class Foreign language and culture classes for self-development of employees

Remuneration and Counseling Asiana Airlines has given salary raises for high performers by their positions or duties through the annual personnel evaluation based on achievements in order to motivate employees. Through the 'Extra Promotion Point Program', we give graded promotion points to talented employees to offer a faster track for promotion. We also offer the opportunity for promotion to those who have received good grades in the Asiana MbA course. Exemplary employees and those who have made great contributions to the company are rewarded on a monthly basis or on the company foundation day(Employee Reward, long Service Reward). For Performance evaluation, we set concrete targets and offer interim assessment for feedbacks to help improve performance in the process. Asiana Airlines evaluates work performance of an employee by the annual achievements. The result of evaluation is used as reference for career development plan and rewards. Evaluation Results are also utilized as capacity development tools for an employee or the organization. Employees share the results with evaluators so as to use the evaluations as tools for determining their self-development fields.

Telepia Grievance Redress Center ▲

Difficulty Counseling difficulties, grievances Receive psychological counseling from ◀ professional psycologists

OZ

休Port Psychological Counseling

Sexual Harassment Counseling sexual harassment report, counseling

Human Rights Asiana Airlines is running a counseling center for rapid and easy settlement of difficulties and grievances. Consult with ▶ HR manager in charge

31

Asiana Airlines Sustainability Report 2015

Maternity Protection Asia Airlines has been making efforts to fulfill the responsibilities and roles as a familyfriendly company that leads gender equality in employment. Some of those efforts include the expansion of female employment, fostering women with professional careers, supporting the coexistence of career and family life and creating a sound corporate culture. Maternity Protection Programs Programs

Contents

Prenatal leave

• From the diagnosis to the day before the maternity leave • up to 2 years for childbirth and childcare

Maternity leave

• 90 days in total + 30 days upon employee request • 120 days of maternity leave for multifetal pregnancy

parental leave

• Institutionalized for all the applicable employees to use

lessen the workload for the pregnant employees

• Pregnant employees placed at posts with less workload upon their request • Shorter work hours for female employees(less than 12 weeks of pregnancy or more than • 30 weeks of pregnancy)

A leave before childbirth

• Female employees suffering from morning sickness, at risk of miscarriage or premature • delivery are given the prenatal leave

Fertility leave

• Reproductively challenged employees can take a leave for fertility treatment

Miscarriage & stillborn leave

• up to 30 days of leave given in addition to the legally mandatory leave considering the health • condition of pregnant employees

Fetus checkup

• Paid 4-hour leave assured for fetus checkup

Gift for childbirth & leaves • KRW 500,000 granted per childbirth for lifecycle events • 3-day paid leave have been implemented before the legislation Childcare expense support

• KRW 203,000 granted per child aged 6 or lower • All employees are entitled

Labor-Management Communication Classification

Aviation

Office/Cabin/Maintenance

Title

Asiana Pilot union (APu)

Asiana Airlines Human Pilot union (AHPu)

Corporate labor union

Cabin union

Date of Establishment

June 7, 2000

August 27, 2014

April 30, 1999

September 23, 2013

Occupational Category

Flight Crew

Flight Crew

Office, Cabin Crew, Maintenance

Cabin Crew

Negotiations in 2014

Collective agreement renewal negotiation, Wage negotiation

-

Wage negotiation

-

Note

Head of the negotiations

-

Head of the negotiations

-

◦ Labor-Management Council

labor-Management Council was established to enhance common benefits of both the labor and the management alike by enlisting more proactive engagement and cooperation of corporate labor union and the pilot union. ✽ Periodic labor-management council meetings are held on a quarterly basis.

S U S TA I N A B I L I T Y D E V E L O P M E N T

32

◦ Occupational Safety Health Committee

The Occupational Safety Health Committee is evenly split between the labor and the management with five people coming from each front, following Article 19 of the Occupational Safety and Health Act. The Occupational Safety Health Committee is also held on a quarterly basis with ad-hoc meetings organized whenever needs arise, and operation of the committee is subject to the Asiana Airlines’ operational provisions for the Occupational Safety Health Committee. ◦ Grievance Redress Committee

The Grievance Redress Committee is evenly split between the labor and the management with five people coming from each front, following Article 26 of the Worker’s Participation and Cooperation Promotion Act. Operation of the committee is subject to the Asiana Airlines’ operational provisions for the Grievance Redress Committee. Asiana Airlines also runs a grievance and counseling center(OZ Hueport) with a professional psychology counselor in the company along with a counseling page on in-company intranet.

Safety and Health in Workplaces

Health Care System Asiana Airlines has been carrying out the health tests specifically designed for the cockpit crew to help maintain flight safety by managing their physical conditions to the optimum level. We also adopted specialized aviation medical examination and one to one customized health care. We offer year-round one to one customized health care to the employees with potential health issues identified in the health exam. Each employee’s health care continuity is maintained by the Integrated Medical Information System which contributes greatly to the prevention of disease and the promotion of health. Especially, we are concentrating on the treatment of cerebrovascular and cardiovascular disease which are caused by unbalanced eating habits and the change of living habits. We are running the year-round health care program in an effort to prevent Dyslipidemia, high blood pressure and diabetes. Employees are able to access to their health information at any time and use them for health care through the Integrated Medical Information System. The system has security measures for information protection in accordance with the related laws. Aiana Airlines offers primary care and counseling to employees for any health issues or emergencies at work. We have introduced a collaborative network with external medical institutions for consistent and seamless health care. Routine medical checkup, special checkups prior to and after new job assignment, health exams before overseas assignment or returning to job have been underway following article of the Occupational Safety and Health Act. Asiana Airlines provides comprehensive health checkup system for workers to boost employee productivity and satisfaction with better health and welfare services.

33

Asiana Airlines Sustainability Report 2015

We have adopted proactive measures and are monitoring the disease outbreak information of health authorities and international organizations to prevent infectious disease. We offer vaccinations preferentially for the workers at the points of contact with customers and field workers. Recently, we have expanded the scope of vaccinations to employees’ families.

Medical Support for Customers To take sick and infirm passengers to their destinations safely and comfortably, Asiana Airlines offers medical recommendations and supports based on aviation medicine. Flight crews should be educated about first aid to prepare for the emergency conditions. Each aircraft should be provided with medical supplies. We also operates a 24-hour hot line call to cope with emergencies.

Medical Support for the Families Asiana Airlines offers medical supports for employees' families by mutual aid organization activities when employees' family members need expensive treatments(e.g. serious injuries, tumors).

Work Environment Control Danger Evaluation, which has been practiced annually from since 2013, is a series of activities to reduce the dangerousness by priority. Field Supervisors and workers can also participate to evaluate harmful factors in workplaces. We sort out risk materials that might cause reproductive harm and replace them with alternative ones by negotiations with aircraft makers. Hearing Preservation Program is underway to prevent noise-induced hearing loss. We are aiming for the identification of the cause of noise emissions and are pursuing fundamental improvements to create safe and comfortable working conditions.

ECONOMY

36 Domestic and Foreign Market Conditions 36 Passenger 39 Cargo 41 Value Sharing of Stakeholders 42 Risk Management 42 Fair Trade 43 Disclosure

Asiana Airlines will raise the corporate value through the reinforcement of Aircraft Competitiveness.

ECONOMY

Aviation Industry Overview

Passenger

36

In 2014, the overall number of passengers increased 11.4% for international flights and 10.3% for domestic flights yoy with the international cargo volume also increasing 3.7% from the previous year. International flights carried 56.78 million passengers throughout the year, which marked the highest-ever performance, buoyed by the combination of factors such as an influx of foreign visitors from China and East Asia to Korea, increment of passenger traffic by lowcost airlines, a stronger won, reduction of fuel surcharge and introduction of the ‘alternative holiday’. Domestic flights also maintained the upward trend carrying 24.65 million thanks to the factor of increase in demand such as the introduction of the alternative holiday, expansion of lCC domestic fights and increased demand for the flights to Jeju(Gimpo-Jeju flights). The international air freight marked 3.41 million tons supported by the expanded cargo flights of airlines and increased transport volume caused by export and import surge thanks to economic recovery in advanced countries. In 2014, the number of outbound Korean passengers(according to the Korea Tourism Organization’s statistics) increased 8.8% yoy with inbound foreign passengers increasing 16.8%. The number of both inbound and outbound passengers went up 12.2% from the previous year. For 2014, Asiana Airlines’ market share stood at 21.4% in domestic passenger(20.6% in 2013), 21.9% in international passenger (23% in 2013), and 24.1% in international cargo.

External Environment In 2014, the number of passengers increased 11 percent by the factors, such as increased number of seats by the introduction of new aircrafts, increasing number of Koreans who trip to overseas because of a stronger won, an influx of foreign visitors from China and East Asia to Korea by the Korean Wave and increased number of tourists who visit Jeju island. International passengers increased 11.4 percent(56.78 million people) in a year which is an all-time high performance. The Driving factors for the performance are the introduction of new aircrafts by airlines, expansion of routes, increase of flights, increased number of foreign visitors from China and East Asia by the popularity of Korean dramas, the Sochi Winter Olympics, the 2014 brazil World Cup, the Incheon Asian Games, APEC in China and introduction of the ‘alternative holiday’. Domestic passengers were increased 10.3 percent(24.65 million people) in a year. The driving factors are expansion of domestic routes by low-cost airlines, introduction of the ‘alternative holiday’, increased number of tourists who visit Jeju island and the increased demands for air travel by marketing campaigns of airlines. In 2015, aviation industry’s cost burden is expected to be reduced by stabilized oil price. International flights’ competition with foreign airlines and low-cost airlines is likely to be aggravated, but the increased demand in China and Southeast Asia will be more pronounced. Domestic flight is likely to be reduced by the KTX Honam line, but the number of passengers on Jeju line are constantly increasing.

Response Asiana Airlines reinforced competitiveness by introducing two A380s, two A330s, an A330

37

Asiana Airlines Sustainability Report 2015

and two A321s in 2014. Altea system has been deployed on november 2014 to create the passenger-airport integrated management system. Altea will contribute to the enhancement of productivity and customer service. As for long-haul flights,we expanded Istanbul flights(since March 30) and Paris flights(since May 24) to five flights per week, by adding an extra flight per week for each line, to extend long distance networks. As for short-haul flights, we added a new route to Jinan(two flights per week) in May and two new unscheduled route to Wuxi and Wenzhou. Furthermore, we expanded some routes to China(Guangzhou, Guilin, Chongqing, yancheng, and busan-Hangzhou) to sharpen the competitive edge in Korea-China routes. In consideration of profit and loss, Asiana Airlines expanded Gimpo-Jeju route following the ch anges to customer preferences and reduced some routes to Japan. Passenger sales increased by 2.8 percent(totaled 3,652.9 billion in KRW) compared to 2013 by the reinforcement of route competitiveness, introduction of new unscheduled routes and flexible supply policy. We have supported various culture and sports events such as K-Pop concerts and the Gwangju universiade to reinforce our brand image as a leading company of the Korean Wave. We promoted a marketing that lived up to customers’ expectations by ‘Dream Wings’ program(an international marketing event for college students) and the introduction of CRM system(a system that manages customer-related works such as systemization of information and reflection of information to optimize the information about customer satisfaction). In 2015, Asiana Airlines will reinforce the competitiveness by the introduction of additional A380s, the expansion of mid-to long-haul flights and profitable nonscheduled routes. Especially, we are planning to obtain the competitive edge in Chinese routes. Also, we will organize a friendly response system for customers through the diversification of sales channels and customer valuecentered marketing. Accordingly, we will cope with the complex change of external environment strategically with the growth of the company and profit-oriented substantiality.

ECONOMY

38

Major Indexes(Passenger) Market Share

< unit : % >

Classification

2012

2013

International Passenger

23.5

23.0

2014 21.9

Domestic Passenger

21.1

20.6

21.4

Performances 2012

2013

Classification

The number of People(KM)

Amount(KRW 1 million)

The number of People(KM)

2014

Amount(KRW 1 million)

The number of People(KM)

Amount(KRW 1 million)

Passenger

32,870

3,671,076

34,523

3,552,094

37,036

3,652,889

Domestic Flights

1,664

307,469

1,706

314,499

1,965

347,259

International Flights

31,206

3,363,607

32,817

3,237,595

35,071

3,305,630

Revenue share by Flight Route

< unit : % >

Classification

2012

2013

2014

Japan

20.9

18.9

16.6

China

19.6

21.0

22.4

Southeast Asia

17.8

18.3

18.5

CIS

1.2

1.4

1.5

America

6.6

6.5

6.2

Europe

2.9

3.0

3.3

Oceania

3.4

3.7

3.2

Domestic

27.6

27.1

28.4

39

Cargo

Asiana Airlines Sustainability Report 2015

External Environment In 2014, major sporting events such as the Sochi Winter Olympics, the 2014 brazil World Cup and the Incheon Asian Games were held one after another. Thus, the increased demand of uHD TVs and new smart phones lead to a boom in air cargo business. In the fourth quarter, the demand of air cargo increased rapidly by the influence of the west coast port strikes in America and the amount of freight cargos increased 3.8 percent year on year. The slide of oil price from the fourth quarter of 2014 to the first quarter of 2015 influenced the reduction of oil expenses in aviation industry. Oil price has been creeping up since the second quarter. Exchange rate shows the sign of the weakened won against the dollar with the rate increase in America just ahead. but yen and Euro is expected to be weakened. FTA with new Zealand, China and Vietnam will have an impact on the increase of air cargo. but the profitability can be worsened by fierce competitions with Middle East and Chinese airlines those which are penetrating into Korean Market.

Response In 2014, Asiana Airlines’ international cargo volume has decreased by 4.0 percent year on year(72.9 kilo tons). Accordingly, the domestic market share decreased 2.4 percent. Most of the decrement led to the increased market share of foreign airlines. Our capacity of supply has been reduced by the deterioration of aircrafts which led to increased maintenance time. Middle East and Chinese airlines’ supply has been increased relatively. but the yield, which represent the sales price of Asiana Airlines increased by 2.5 percent in dollar terms and this helps improve the profitability. Thus, the revenue from routes marked KRW 1,306 billion(only 2.4 percent decreased year on year). As for the changes in surroundings of air freight in 2015, our predictions are decline of oil price, expansion of cargo plane operations, growth in trade between countries by the economic recovery in America and increase in trade of the equipments related with smart phones and semiconductors. In the long term, air freight will show a modest increase by the decline of oil price and the recovery of the world economy with the advanced countries at the center. Considering those external factors, we selected e-commerce and temperature control goods, which represent the increase in demand, as our next generation growth engines and will expand the supply. In addition to that, we will reinforce the manpower to expand the sales of belly using the aircraft networks. To enhance business operation efficiency, we will computerize export cargo works at the airport by introducing PDAs and will introduce next generation cargo system to increase the revenue from routes through demand prediction. We will monitor the real time operation status by linking the cargo operation system and cargo homepage to improve customer service quality. The demand for cargo is influenced by global economic downturn from the financial crisis in Europe because of its sensitiveness to the changes in global economy and fluctuations in volume of freight cargoes. According to a press release from the Ministry of land, Infrastruct ure and Transport, in 2015, cargo transport maintained an increase by the decline of oil price, expansion of cargo plane operations, growth in trade between countries by the economic recovery in America and increase in trade of the equipments related with smart phones and

ECONOMY

40

semiconductors. In the long term, air freight will show a modest increase by the decline of oil price and the recovery of the world economy with the advanced countries at the center. To respond to the cargo business, which is sensitive to the changes in market, in a flexible manner, Asiana Airlines will do the best to increase sales by strategic marketing and effective operations of aircrafts. At the same time, we will apply practical route patterns and freight operations to reinforce cost competitiveness.

Major Indexes(Cargo) Market Share



Classification

2012

2013

2014

International Cargo

25.6

26.5

24.1

Performances 2012 Classification

2013

2014

The number of People Amount The number of People Amount The number of People Amount (million tons KM) (KRW 1 million) (million tons KM) (KRW 1 million) (million tons KM) (KRW 1 million)

cargo Domestic Flights International Flights

4,209

1,450,584

4,062

1,401,365

4,000

16

6,094

18

7,618

20

1,373,670 9,078

4,194

1,444,490

4,044

1,393,747

3,980

1,364,592

Revenue share by Flight Route Classification Japan Southeast Asia

2012

2013



2014

6.1

4.8

4.0

15.4

17.3

16.2

northeast Asia

8.9

9.6

8.9

America

46.2

44.2

46.9

Europe

22.2

22.8

22.6

Oceania

0.8

0.7

0.7

Domestic

0.4

0.5

0.7

41

Asiana Airlines Sustainability Report 2015

Value sharing with Stakeholders

We Asiana Airlines will accomplish a consistent growth by sharing the values with internal and external stakeholders.

⑧ ⑨ ⑥

Classification

⑦ ①

⑤ ② ④



Cost(KRW 1,000) Share(%)

note

① Personnel expenses

763,268,236

17.3

Employee Wage, Incentives, benefit Allowance, Severance Payment, Employee benefits, national Pension, Medical Insurance

② Depreciation and intangible asset amortization

344,268,820

7.8

Tangible Assets(Aircraft, Equipment and Supplies for Aircraft, buildings) and intangible Assets(Software, etc)

③ Fuel

2,001,640,099

45.5

Jet Fuel Cost, etc.

④ Rental

465,361,076

10.6

Aircraft/Airport Office lease

⑤ Maintenance

282,214,028

6.4

Equipment and Machinery for Maintenance, Outsourced Repair, etc.

⑥ Airport

395,875,867

9.0

Ground Expense, Airport Facility usage Fee for boarding bridges, Counters, etc. Ground Passenger Expense for Airport Specialty Service Fee etc.

⑦ Interest

134,684,229

3.1

Aircraft lease, etc.

⑧ Taxes, Public Dues

9,362,006

0.2

Aircraft Property Tax, Worksite Tax, Overseas business Tax, etc.

⑨ Community Investment

5,600,899

0.1

Donation, Grants for Social Contribution, etc.

Major Cost Shares Classification

2012

Fuel Personnel expenses

< unit : % >

2013

2014

48.6

48.1

45.5

16.1

16.5

17.3

Sales office & Branches ◦ Passenger Branches

Sales : 10 domestic branches(3 offices), 74 foreign branches(30 integrated branches, 9 offices) Airports : 10 domestic airports, 38 foreign airports ◦ Cargo Branches

14 branches, 1 office ◦ Details

CIS •6 sales branches (4 integrated branches, 1 office), 1 airport branch

China •23 sales branches (11 integrated branches, 2 offices) 11 airport branches •1 cargo branch

Domestic •10 sales branches

(3 offices) 10 airport branches

Japan •14 sales branches (9 integrated branches) 6 airport branches •1 cargo branch America •6 sales branches, 6 airport branches •6 cargo branches, 1 office

Southeast Asia Europe •5 sales branches (2 integrated branches) 3 airport branches •5 cargo branches, 1 office

•11 sales branches

(3 integrated branches, 5 offices) 10 airport branches •1 cargo branch

Oceania •3 sales branches (1 integrated branches, 1 office) 1 airport branch

ECONOMY

Risk Management

42

Aviation industries are bound to have more foreign currency-denominated debts than assets and spend more foreign currency than revenue received on foreign currency. We also have a continuing demand for air fuel. Thus, the changes in exchange rate and oil price have significant impact in company's profit and loss. That is why Asiana Airlines has established and applied risk management policies for more structured and efficient risk management. A risk management committee has been established to promptly respond to external risks, having business Management Office Head as Committee Chair, and executives and team leaders from relevant departments as committee members. Risk Management Committee Classification

Note

Objective

Develop risk management strategy against external risks and define hedging tactics and the optimal hedging ratio

Structure

• Chairman : business Management Office Head • Committee Members : Financial officer, Strategy & Planning officer, Procurement officer, • practical business affairs team leader (5 People)

Period of meeting

• Periodic quarterly meetings complemented by ad-hoc meetings whenever needs arise

Agenda

• Exchange rates – currency exposure • control, Oil price - program hedge strategy, interest • rate – interest rate (fixed, variable) strategy

Activities in 2014

• 4 periodic meetings (quarterly)

To deal with the exchange rate issues, we preferentially apply internal management techniques such as matching the foreign currency income and expense through the change of the currency of settlement and/or expanding the borrowing portion of the currency in long position(income > expense). We are coping with the exchange risk through the external techniques such as forward exchange dealing for the remaining exposed currency. As for the oil price, we pay due regard to the effect of oil surcharge, an interrelation between oil price and corporate performance and the level of oil price. Then we apply ‘Program Hedge’ by buying certain portion of prospective annual oil supply consistently. With that, Asiana Airlines reduces volatility by oil price fluctuation. lastly, as for the interest, we take the equal maintenance of the portion of amount between fixed interest rate and variable interest rate as our basic strategy. but when new borrowings or aircraft rental contract takes place, the portion of amount is varied flexibly to deal with the changes in the financial market actively.

Fair Trade

Asiana Airlines has an internal fair trade compliance program in place to ensure voluntary compliance for fair trade and better competitiveness. For more rigorous compliance, we provide information on relevant laws home and abroad, and case examples of law enforcement via the bulletin board. The proactive work agreement system for fair trade has been in place in 2013 to preempt abuse of market dominance, unfair collusion and outsourcing, breach against contract terms, and advertisement agreement. In 2014, regular trainings on Fair Trading Act were provided to new hires, and overseas assignees working in relevant practices and employees in domestic and foreign branches . We gave fair trade law educations for those who work at high-risk departments.

43

Disclosure

Asiana Airlines Sustainability Report 2015

Asiana Airlines gives all stakeholders an access to corporate information, business performance and other important issues, and enhances accounting transparency through disclosure. We introduced an internal regulation system in order to be prepared against any possible lawsuits due to violation of the Capital Market & Financial Investment law and class action lawsuits, holding each team who has generated the report accountable, generating a checklist by sector to prevent omission or errors in the periodic reports and having it reviewed and approved by CEO and CFO to enhance credibility of the disclosed financial information.

Classification

Business Report

Semi-Annual/Quarterly Reports

Disclosure Scope

Corporate overview, business performance, financial information, audit opinion at the end of the business year

business performance, corporate overview, financial information, etc at the end of 1H/2H and every quarter

Disclosure Period

In less than 90 days after the business year is over

In less than 45 days after the quarterly closing date

Disclosure in ’14

1 time

3 times

Whenever there is any change that may impact business management, Asiana Airlines makes sure the change or news to be disclosed immediately. We also proactively disclose nonfinancial activities such as a voluntary compliance program for fair trade, green management information and etc.

Internal Accounting Control System Pursuant to Article 2, Section 2 and 3 of Act on External Audit of Stock Companies, which serves as the legal ground to obligate businesses to prevent any error or fraud in the financial statements and subject any non-compliance to disciplinary measures, Asiana Airlines has introduced an internal accounting control system to assure generation and disclosure of accurate accounting information and conduct on-going monitoring. The internal accounting control system holds an inspection in accordance with the corporate provisions and the business accounting standards, which closely examines accounting process, valuation of corporate assets and debts, compliance with the accounting standards regarding profits and expenses. by taking those steps, now are assured that the Internal Accounting Control System is operated by regulations.

C U STO M E R S AT I S FA CT I O N

46 Safety Management 49 Aviation Safety Support 52 Service 54 Marketing 55 Operation of Customer Satisfaction Management System 57 Awards

Taking safe, fast and comfortable flight as the highest value, Asiana Airlines offers one step ahead customer service.

C U S TO M E R S AT I S FA C T I O N

Safety Management

46

Establishment and Operation of Safety Management System Asiana Airlines has established a management system in accordance with the ICAO(International Civil Aviation Organization) requirements for the first time in Korea. When introducing the system, we laid emphasis on the prevention of safety accidents. It is an integrated safety management system that manages the safety of every workplaces including Asiana Airlines' headquarters in a systematic way. The system was built to fulfill our safety objectives and safety performance goals through the risk management process. ✽SMS, Safety Management System : A system structured to analyze various risk factors that impact flight operation in a comprehensive way to ✽SMS, Safety Management System : eliminate potential accidents and hazard elements.

Safety Management Key Map

Inspection Patrol

Safety Audit

Safety Trainings

Safety Performance Index Management

Safe Flight Assurance

Safety & Security Forum

◦ safe ◦ fast ◦ comfortable

Customer Satisfaction through optimal safety and service

Flight Operations Quality Assurance

Safety Management System Key Map ⇠ Report & Internal Review Assessment

Safety Target Setting

Target Setting

Establish Countermeasures, Action

Hazard Identification

Risk Assessment

Risk Management Process

Maintain Zero Aircraft Accidents

Reach Target

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Asiana Airlines Sustainability Report 2015

Safety Management Organizations Classification

President & CEO

Role

Note

• Report major safety and security issues and Safety & Security • SCM’s conference results to executives Review board • Approve risk management results of (SRb) • major events

• Host: CEO • Participants: Division chiefs • Function: Top decision-making body of corporate • safety issues

• Discuss decisions and action plans Safety & Security • decided by SRb Committee • Discuss Safety Performance Index (SCM) • analysis results

• Host : Head of Safety & Security Management • Participants: Executives of each division who is in • charge of safety issues, Section leaders • Function : Decide Safety Performance Index action plan

Safety & Security Management Safety & Security Officer In Charge

Proactive Safety Team

Safety Audit Team

Aviation Security Team

Safety Investigation Team

Safety Acting Group

• Discuss agendas Transferred from • SRb and SCM • Establish remedial actions for agendas

• Form: ad hoc organization • Function: solve disputes through the agreement • between teams

Organizations for Safety & Security Management

Safety & Security Review Board Chairman : President & CEO

Safety & Security Committee Chairman : Safety & Security Management Operation Quality

Maintenance Quality

Cargo Service

Cabin Quality

Airport Service

Control Support

Head of Safety & Security Management and Division Chief

operation

Maintenance

Cargo

Cabin

Airport

General Control

Safety Acting Group

Safety Training Safety Management System Training

Trainees (unit: persons) 8,178 7,763 7,239

9,729

Safety Training Plan (2015)

6,204

2010

2011

2012

2013

Asiana Airlines is instilling the awareness of safety in all the employees and providing education on accident and incident prevention. We make proactive efforts to prevent possible dangers through special education on training per area of expertise.

2014

Safety Management System Training

• Specialty trainings for safety and quality control • (accident inspection course, safety audition course etc.)

All Employees including Executives

• Managers and/or employees who is in charge of internal safety and quality control

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Annual Flight Crew Training hours and costs

1,225

1,315

1,385

1,433

Training hours

The number of the pilots 2011

2012

Classification

2013

2014

Total

2011

2012

2013

2014

Average

139,865

210,901

159,684

163,166

166,904

Per person

114.2

160.4

115.3

113.9

126

Training Cost(KRW 1 million)

8,835

8,168

9,114

9,236

8,838

Per person(KRW 1,000)

7,213

6,212

6,585

6,445

6,614

note) table above is written on the basis of Safe Flight Crew training annually conducted including on-off line training 주)

Special Trainings for Safety Operation & Investment on Training Facilities ◦ Reinforcement of Cockpit Crew Training SIM Special Training and Check for A320 pilots

• Training Hours : Special Training(0+30), Special Check(0+30) • Trainees : 349 people • Training Period : April 16 ~ June 20, 2015 • Details : Holding takeoff in low visibility Rejected landing during non-precision landing approach Go-Around on non-precision approach or at decision altitude련 내용

Crew Concept Training application to F/O initial, Transition course Application

Assign a line captain in 3 major lessons for co-pilot(Final Training, Audition, lOFT)

SIM Training Situation A cockpit team in the same environment as a real flight (flown by Captain and F/O)

Investment on Training Facilities Order A350 SIM Upgrade B747-400 SIM Upgrade A320 SIM Visual System

Scheduled to introduce SIM of next generation aircraft A350 The same panel and flight system as a real aircraft updated to new visual system, Change lED Projectors, Offer real scene training environment which is the same as the latest airport

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Asiana Airlines Sustainability Report 2015

Safety Operation ◦ CRM Training Result Total Number of Times

Attendees

Note (hours)

Joint CRM(Type A)

42

823

8

Joint CRM(Type b)

18

487

2

CRM Training Promotion

12

71

8

Refresh CRM Training

3

34

8

Family CRM

5

102

6

Program

Communication Skill-up

5

123

24

Trainer Appointment CRM Training

11

54

8

Regular CRM Training for Trainers

9

164

4

Initial CRM Training

4

73

24

Regular Common CRM Training (First half of the year)

1

1,325

E-lEARnInG

Regular Common CRM Training (Second half of the year)

32

1,372

Collective training

✽CRM(Crew Resoure Management) : A system introduced to get rid of possible obstacles of safety flight and to set a trend of respecting cockpit ✽CRM(Crew Resoure Management) : crew’s role and responsibility. CRM has contributed to the establishment of safety culture.

◦ Improvement of LOFT(Line Oriented Flight Training) Training Method (Former)

Establish 3 scenarios1) before training and apply one randomly to a cockpit team

note1) SCENARIO : A method applied to lOFT which is created by integrating materials such as, training contents of each aircraft models, seasonal changes, weather characteristics on flight areas, training results of the past that was analyzed by operation training team, information collected from external education institutes. The materials are demanded by safety operation team. Cockpit crews deal with the scenario by using CRM methods.

Training Method (Improved)

Create other types of scenarios(methods for the adaptation to lOFT2) which consist of Purpose & Operating Guide, Event Guide, Flight Operation Documents, load Sheet) instead of former ones. Trainees are only given another Operating Guide(which specifies trainer's duty, training category and guideline). To accomplish an objective and practical training, a trainer is given complete authority for the supplied Event Guide.

note 2) LOFT (line Oriented Flight Training) : Various operational and technical problems are given from a high-performance simulator. Cockpit crews cope with the problems in “real time(in a situation which is the same as real line flight)”.

Aviation Safety Support

OCC(Operations Control Center) ◦ System Configuration

The systems(aircraft scheduling system, real-time flight monitoring system, Asiana Flight Operations Control System(AFOCS), web-based voice communications system, spot management system) are shown on a large wall screen made of twelve 50-inch lCD TV screens. We collect various information from the screen and make effective decisions. To be always ready for emergency situations, OCC is equipped with uPS(uninterrupted Power Supply), automatic fire extinguishing system, and network security system.

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◦ Operation

In OCC, there are experts in various fields - including flight dispatchers, cockpit crews, maintenance engineers, load controllers, cabin crews, sales people - who are stationed at all times. To track airplanes in operation across the globe on a real-time basis moreover, these experts instantaneously control any disruption based on real-time communications with the cockpit crew through satellites or web-based communications, in order to provide best-in-class flight safety and customer services.

Aircraft Operation Control System PegaSys

Scheduling system used to decide aircraft operations such as assignment, change, delay, cancellation

FWMS

A system that monitors whether an aircraft is in normal aviation by comparing a flight plan with location, altitude, fuel consumption, flying time of a aircraft in real operation

AFOCS

Integrated control system to monitor every information related to aviation operations (such as operation information, operation statistics, weather conditions, nOTAM, aircraft, airports, crews, flight plans) at a glance

WEB-IOCS

Voice communication system to make contacts with crews or ground staffs in all domestic airports and major foreign airports by linking company radio frequency or walky-talky radio frequency to the internet

ACARS

Data/character communication system that report location, altitude, fuel consumption, operation status of an aircraft to the ground automatically. This system also supervise text communications between aircraft and the ground.

Spot management system

A control system for adjustment, change and allocation of the spots to put aircrafts in Incheon and Gimpo Airport.

note) ACARS(Aircraft Communications Addressing and Reporting System)

Management and Construction of a Weather System Asiana Airlines receives weather information from all over the world and monitors the weather conditions in real time. We have built an integrated control system(AFOCS) which is able to give warnings to the airports when the bad weather is expected and supervises internal sharing and spread of weather information to take proactive measures. Asiana Airlines has introduced a weather system from Weather Service Incorporated, an American private company that supplies forecasting information of airports and routes with precise analysis of the weather conditions, in May, 2015. We have strengthened the safety operation and customer service with proactive safety measures such as taking detour routes by monitoring bad weather and reinforcing the weather information supply for operation crews. Our new weather system supplies quick and precise information(turbulence on routes, volcanic ash, icing, dust storm, convective areas etc.) to the operation crews. Thanks to the system, we reinforced the safety of customers on the airplanes by avoiding the areas where bad weather can be expected.

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Asiana Airlines Sustainability Report 2015

Asiana Crisis Management System(ACMS) Asiana Airlines has been operating a Crisis Management System. When crisis arise, we take quick and effective measures through integrated management of related information. We offer accurate information to customers through an exclusive accident-related site(Dark Site) and the operation of inquiry calls. The system carries out quick transmissions of information and emergency call-up through emergency communication feature. Thus, the system embodies quick and precise information exchange between situation room in the headquarters and the site. Since May, 2015, Asiana Airlines has been promoting an additional development of the system in response to the proliferation of mobile devices. by supporting the access through mobile devices, we are able to make quick and accurate decision through faster initial measures and crisis management. Asiana Airlines increases the satisfaction of passengers and their families by coping with crisis dedicatedly.

Flight Planning System lido is a flight planning system which contributes to the safe and economical operations of Asiana Airlines. It helps flight dispatchers make flight plans by checking weather conditions of airports where airplanes depart and arrive and alternate airports and identifying any operational restrictions. Furthermore, it ensure safer flight operation by offering graphic data indicating severe weather conditions on routes such as turbulence and icing to cockpit crews. such as turbulence and icing. The graphic output also contains information about the altitude, the temperature and the airspace and therefore enables a clearer understanding about the air route. In addition, lIDO contributes greatly to an economical flight operation. It enables us to compare multiple routes at a time and helps selecting the optimum routes based on quantitative comparisons over fuel consumption, flight time and overflying charge. The system also makes possible to compose optimum air routes in advance by analyzing data of new routes. As of the year 2014, new short routes(entry/exit point of Russia and Mongolia) was added and we have discovered 10 economic routes in all. by utilizing those routes, we save the fuel and realize cost-effective flight.

C U S TO M E R S AT I S FA C T I O N

Service

52

Care Service ◦ Hansarang Lounge

Hansarang lounge which has been built in Incheon International Airport in 2011 is an exclusive lounge reserved for the passengers with disabilities. The lounge provides not only the resting space but also the services and it is the first of its kind made available in the aviation industry. With the internal facilities designed with lower heights, and all instructions presented in braille, the lounge has barrier-free interior for physically challenged passengers, so they can enjoy a variety of entertainment activities with ease. ◦ Care Service for the Challenged

For the passengers with disabilities in need of active and careful help to enjoy comfortable travel with Asiana Airlines, we have conducted a set of trainings for our service employees on customized catering method for the challenged passengers, by inviting experts from the groups representing the people with disabilities. In addition, by applying a special wheel chair tag on their luggage, we’re helping the challenged passengers collect their belongings quickly and correctly. We have also prepared the service infrastructure specifically designed for the challenged (e.g. special vehicles–low floor bus, Hansarang service car, invalid car) to assist their movement about the airport complex.

Airport Automation Service ◦ Internet/Mobile Check-in SVC

Asiana Airlines provides One-pass Service for domestic flight that allows the passengers to board the plane right away with the ticket printed at home. There is also an on-line and mobile check-in service available by which individual passengers can assign seats and complete the check-in via the Internet or smart phone, and later be fast serviced at a designated counter at the airport. ◦ My Flights

Asiana Airlines developed a mobile application named ‘My Flights’ in 2012 that provides various tips for traveling required on the run via centralized single channel. by simply registering a preferred flight in My Flights menu of the application, the customer can get the necessary information specified by time range. The system sends off a push alarm for useful tips regarding automated service, passport and visa, and final boarding instructions while enabling the customer to easily find such information as luggage rate of the selected route, weather condition and exchange rate at the destination, and more information about flight and airport. ◦ Self Check-in SVC

The Self Check-in Service of Asiana allows passengers to complete the check-in quickly and easily through the self check-in kiosks at airports both at home and abroad with no need for waiting. ◦ Real Time Information for Waiting Customers

Asiana Airlines has put in place a system for waiting passengers that informs domestic flight

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Asiana Airlines Sustainability Report 2015

passengers waiting at the airport for ticketing without reservation, of their wait numbers real time. This service is available in GMP/CJu domestic airports.

Differentiated Service ◦ Weihai Point Golf Express Service

Weihai Point Golf Express Service is Asiana’s one-stop service provided in alignment with a golf club to meet ◦ Service Catering to Women

Our Happy Mom service is for the moms traveling with their infants whereby they can receive various supports to minimize the discomfort they might feel during the long flight hours along with priority boarding services. Also, pregnant women can use our ‘PreMom’ service that cares for the expecting mothers from the departing airport to the destination with enhanced services and detailed attention to reduce any potential inconvenience. ◦ In-Flight Food & Beverage Service

As part of our efforts to promote Korean culinary to domestic and overseas passengers, we added ten royal dinner menus based on the advice from the Institute of Korean Royal Cuisine and offer them through first class preorder on long flights departing from Incheon. We have introduced Kimchi as an in-flight food for the first time in Korea and have also developed new fusion menus such as Steak with White Kimchi, Kimchi bacon Wrap and Kimchi Frittata to make Korean food more accessible and familiar to foreign passengers, letting Korean food known to the broader global community. Healthy and wholesome rice snacks have also been introduced to please the palate of passengers and contribute to farming communities by promoting consumption of Korean agricultural products. We are also serving a variety of luxurious western foods in collaboration with the leading Italian restaurant, la Cucina. In addition, premium wines carefully selected by Asiana wine consultant group of renowned sommeliers go very well with the dishes, making the air travel with Asiana all the more enjoyable. The excellency of our in-flight food and wine is proved by world’s major research agencies and travel magazines. In 2014, Asiana Airlines won the third prize in ‘world’s best economy class in-flight food’ category presented by Skytrax, a prestigious british research agency. We also won the third prize in ‘first class best champagne’, second prize in ‘first class best white wine’ and first prize in ‘first class wine’ presented by Global Traveler, a business travel specialty magazine.

Other Activities ◦ Cung Nhau Library of Hope

The word “Cung nhau” means “together” in Vietnamese. ‘Cung nhau library of Hope’ is a joint project of Asiana Airlines and Viet-Korea Cooperation Center to construct libraries in middle schools on rural areas of Vietnam. The project consists of programs such as painting murals on library walls, donating books and properties, meetings with students and opening

C U S TO M E R S AT I S FA C T I O N

54

ceremonies. We hope the students will show better academic performance by this project. Major achievements of this project are as follows. 2013 : Cu Khe Middle School, Thanh Oai prefecture, June 2014 : Thanh binh Middle School, Thanh Oai prefecture, June 2015 My yen Middle School, Dai Tu prefecture.

Marketing

K-POP Marketing Asiana Airlines started supporting K-POP from 2012 to help the zeal for Korean culture spread across the world with an aim to increase communication with customers. It entered into a business partnership with ‘M-live,’ the global concert brand of CJ E&M in February 2012, with yG Entertainment in January 2013, and with JyP Entertainment in October 2014. The partnerships offer various benefits such as discounts for artists and relevant persons on overseas concerts, excess baggage allowance and convenient booking/ticketing/boarding services.

Student Sponsorship Program ◦ Dream Wings

Asiana Dream Wings is a ‘Dreams Come True’ program designed to give a chance to turn dreams into reality and sponsor overseas activities of college youths. Starting from the first recruitment in 2011 up until the fourth selection in 2014, the program drew attention of many with a total of 7,928 students applied for participation. until now, 112 students have been selected as members and have visited Asiana Airlines' foreign destinations. In 2015, especially for the fifth year of the program, we are going to hold ‘a marketing strategy contest’. ◦ Asiana Flying Marketer

From the first recruitment in February 2014, we have been running 'Asiana Flying Marketer' as a college students' marketer program. Twelve students who are selected as a marketer ought to perform their tasks each month individually or as a member of a team for a given period. They also perform online marketing utilizing blogs and SnSs. The department in charge selects a winning work and use it as real marketing contents. Outstanding marketers are given an international trip and two of the best marketers are given scholarships. In the first half of the year 2015, students of the 3rd selection were given a trip to the major destinations of A380.

SNS Communication We utilize SnSs as mutual communication methods to set up channels with the customers. SnSs are also used as our promotion channels to propagate our major issues. Asiana Airlines,

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Asiana Airlines Sustainability Report 2015

who has the largest number of SnS friends in domestic aviation industry, offers information about travel and other aviation-related news through Twitter, Facebook, Cacao Story and Instagram. We also offer real time answer, reception of customers' praises & complaints and events for customers through SnSs.

Magic Boarding Pass ‘Magic boarding Pass’, which has been launched in January 2009, is a differentiated service program for our customers. When a customer shows Asiana Airlines’ boarding pass within

seven days from the boarding, our partner companies provide discounts or special benefits for money changing, transportation, travel, shopping and so on. In 2014, 11 partners have been newly registered, and we have 41 partners in all. Especially, we have secured partners in Japan and Hong Kong to enlarge our customers' benefits. In Japan, we set up a partnership with ‘Tokyo Monorail’ and launched Asiana-Monorail Discount Ticket. In Hong Kong, we set up partnerships with ‘Cotai Water Jet’(Ferries operating between Hong Kong and Macau) and ‘Hong Kong Ocean Park’(leading theme park in Hong Kong). We will enlarge our partnership to major destinations for customers’ global benefits.

Customer Satisfaction Management System

Asiana Airlines strives to improve service quality and innovation so as to achieve the management philosophy of ‘customer satisfaction through the safest flight and superior services’ while living up to expectations as the ‘global airline that offers the best service.’ Especially since 2007, Asiana Airlines has been rated with five stars by Skytrax, the uK airline service rating agency for nine consecutive years. We are recognized for excellent services by world's major aviation service rating agencies and travel magazines. In 2015, we are trying our best to be a reliable and beautiful company under the new motto “Strengthen Self without Stopping”. We will strive tirelessly to make a strong and beautiful company and to get customers’ trust in our efforts for safety operation and services.

Customer Satisfaction Management System Asiana Airlines’ customer satisfaction management system is intended to identify issues requiring improvement through varied assessment and analyses of its service quality, and to increase the service quality. The identifying process is performed actively by departments in charge. Especially for issues for which corrective actions were taken, we continuously monitor the outcome and customer feedback so as to incorporate customer viewpoint into service quality improvement.

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Service Quality Management System • VOC Analysis

Voice of Customer(VOC)





Customer Survey

• Service Quality Survey by Three local Agencies • Customer Satisfaction Survey on Asiana Club Members • Star Alliance On-line Satisfaction Survey

Improvement of Service Quality from Customer Viewpoint



• Service Quality Field Inspection & Audit(Domestic & External) • Service Inspection by Employees upon their business Trip • CFI(Customer Feedback Index) Service Quality Inspection & Audit



Feedback of Inappropriate Service

Sophistication of Service Quality Control Procedures

* CFI : On-Time Performance, Delay due to Maintenance, * CFI : Call Center Waiting Time, baggage Accident Rate Index

VOC Management System Asiana Airlines has introduced a new VOC system in 2013 to receive, analyze and monitor customer feedback in real time and deal with the cause of the complaints in proactive manners. Especially, we took intensive measures against VOCs which were frequently received in a specific route or season and improved VOC management system to forecast the factors in advance. We also will extend the scope of VOC collection to VOCs received through external channels and develop optimized data analysis logic and utilize it strategically on customer's opinion analysis, risk management and concept creation of new products.

Efforts to Improve Customer Satisfaction Asiana Airlines is running a ‘Service Quality Inspection Program’. Service quality experts with abundant flight experience or employees upon their business trips get aboard an airplane to inspect and manage the service quality effectively. Also, Asiana Airlines regularly conducts customer satisfaction survey with Asiana Club to identify overall service quality level and customer needs and the results are used as the basis for the establishment of service quality differentiation strategy. Asiana Airlines set up the ‘Customer Satisfaction Improvement Committee’ consisting of the top management, relevant executives and department heads. The committee members meet on a periodic basis to establish and implement customer satisfaction policies, determine how to operate customer service teams, govern the organizations, and plan and take actions to prevent recurrence of customer complaints. Furthermore, when there are issues requiring coordination of different opinions between departments on customer service criteria/procedure or immediate development of policies, the committee holds a sub-committee meeting where the department heads promptly make decisions to create a momentum for service quality improvement. Asiana Airlines discloses violations of standard or procedure on weekly basis to improve the service quality. For a service quality issue that needs to be improved in the long run, we promote a cooperation with related sections.

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Asiana Airlines Sustainability Report 2015

Awards

Asiana History of Airline of the Year

2009 Airline of the Year ATW(Air Transport World)誌

2011 Airline of the Year Global Traveler (USA)

2012 Best Overall Airline In the World Business Traveler (USA)

Five-Time Winner

2010 Airline of the Year Skytrax (UK)

2012 Airline of the Year Premier Traveler (USA)

5 Star Airline for 9 consecutive years Skytrax (UK)

Awards Record(2014~2015) Date

Awarder

• World’s best Economy Class • World’s best Economy Class Onboard Catering

Award Name

2015.6.16

SKyTRAX

• best Overall Inflight Experience in the World (8 times) • best Overall Customer Service - Airline - Ground/Call Center (6 times)

2015.1.8

business Travel Award

• best Airline On board Service (11 consecutive years) • best Flight Attendants (11 consecutive years) • best First Class Seat Design • best Wines on the Wing (Int'l F/ClS) (2 times)

2014.12.15

Global Traveler

2014.12.4

Premier Traveler

• World’s best Airline Economy Class • World’s best Aircraft Cabin Cleanliness

2014.7.15

SKyTRAX

• The top International Airlines (World’s best Airlines)

2014.6

• best Overall Customer Service Airline - Ground/Call Center

2014.1.13

business Traveler

• best Service Airline

2014.1.7

Shanghai Morning Post Oriental Morning Post

• best Flight Attendants in the World (3 consecutive years) Int’l • best In-Flight Services in the World (2 consecutive years) • best Airline Service to Asia • best business-Class Service in the World • best Airline Advertising Campaign

• best International Airline

2014.1.9

• 2015 best companies to work for in Korea(K-GWPI) 1st in Aviation Industry

2015.8.27

• 2015 Korea Well-being Consumer Index(KS-WCI) 1st in Airline

2015.8.20

• 2015 Premium brands Index(KS-PbI)

2015.7.22

• 2015 Korean Standard-Service Quality Index(KS-SQI) 1st in Aviation Industry

2015.6.25

• 2015 4th best loyalty In Korea selected by customers, brand Grand Local • Prize in Aviation Industry

Travel & leisure

Korean Standards Association

2015.4.22

Korea CEO Association

• 2015 national Customer Satisfaction Index(nCSI) 1st in International Airline • 2015 national Customer Satisfaction Index(nCSI) 1st in Domestic Airline

2015.3.30

Korea Productivity Center

• 2014 KCSI 1st in Aviation Industry

2014.10.7

KMAC

• 2014 KS-CQI 1st in Aviation Industry

2014.6.26

Korean Standards Association

• 2014 national Customer Satisfaction Index(nCSI) 1st in Domestic Airline

2014.3.25

KMAC

ENVIRONMENT & SOCIAL RESPONSIBILIT Y

60 Environment Management 61 Climate Change Response 66 Environment Control 69 Environmentally-Friendly Activities 70 Social Responsibility

Asiana Airlines will fulfill the social responsibility with Environment Management and Social Contribution.

ENVIRONMENT & SOCIAL RESPONSIBILITY

60

Asiana Airlines has introduced sustainable management into all areas of business in order to take into account economical environmental and social aspects when conducting business activities. In this day and age, not only financial factors but also non-financial factors such as environmentally sound and socially responsible behaviors can influence and impact a Company’s valuation both directly and indirectly. Asiana Airlines recognizes such implications and importance and as such pursues various activities that contribute to the betterment of the society. An aircraft needs steady supply of energy in order to be able to provide safe and comfortable flight to the passengers on board. Given how fuel is the primary source of energy for airliners, it is especially crucial for airliners to increase fuel efficiency and reduce the fuel consumption. And that is what we had thought about before the importance of natural environment was highlighted. All Employees of the Company is made aware of the importance of environmentally friendly management on all front, which is closely related to use of energy for flights from the preparation stage on the ground to actual flights in the air.

Environment Management

Asiana Airlines has placed environment management as one of the core element for the Company’s sustainable growth factor. For the quality of water and air which impacts the environment, the Company has set up and managing standards that are stricter and higher than the legal requirements. Also, we are trying to reduce waste. When it comes to responding to the various Climate Change related regulations and strengthening demands both at home and abroad regarding matters such as reduction of green house gas(GHG), Asiana Airlines is proactively making effort to reduce use of fuel in every stage of Aircraft operation and GHG. Asiana Airlines aspires to become a green airline and is committed to preserving the environment without hampering the self-purification cycle. As such, the Company has defined key strategies to implement environment policies and initiatives to minimize carbon footprints in air and water and energy in its Environment Vision. In addition, by creating an Environment Emblem of ‘The one and only Earth, as precious as our customers’, Asiana Airlines promotes awareness about the environment to all employees and customers.

Environment Policy ―

Key Strategy ―

• Minimize consumption of energy • and resources • Continue to improve environmental • impact • Proactive compliance • Win-Win management and information • -sharing with stakeholders

• Introduce the latest high efficiency aircraft and engines • On-going Fuel Saving Policy • On-going Environmentally-friendly Campaigns • Reinforce Green Company Activities • Find Improved Case through Environment (Practical Affairs) Council • Emission within 50% of Regulation Standards • Establish Voluntary Means to reduce GHG • Publish Sustainability Report • Green Campaign by Engaging Customers

Vision ―

Environmentally-friendly Airline in Harmony with nature

Corporate Support HQ



Corporate Support



General Administration Team



Manager for each HQ

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Asiana Airlines Sustainability Report 2015

Environment Management Organization For the efficiency of Environment management, Asiana Airlines has reorganized the environment management organization to be directly under the Management Administration Division. by appointing Environment managers per Division and per Sector, any and all environment related business are monitored frequently onsite, and in case of any emergency or unusual activities, immediate action is taken and reported quickly to General Administration team to facilitate the report.

Environment Management System Asiana Airlines has established company-side environment standards in order to consistently pursue targeted direction, using ISO14001(Environment Management System, ’96.9.1) accredited to an airliner for the first time. Every year, environment impact potentials and outcome are evaluated to control and minimize impact on environment, and on a yearly basis plan and actual of environment impact are compared. In addition, the Company is conducting internal review on overall environment management and furthermore, it is receiving evaluation from an accredited institute outside of the Company at least once a year to identify and receive appropriate consultation for further improvement.

Environment Education Asiana Airlines is conducting environment related education and training as a mandatory course for its incumbents as well as new recruits. The course focuses on environment management system and vision, mid to long term plans of Asiana Airlines as well as on past endeavors. In 2014, 350 newly recruited(general, sales, airport, maintenance, etc) and 100 incumbents were given lectures on environment related courses.

Climate Change Response

Local and International Response ◦ GHG/Energy Target Management System

Since Asiana Airlines was included into GHG/Energy Target Management system in 2010, we are subjected to GHG regulations for CO2 emissions generated by domestic flights and from its worksites (the headquarters, Domestic airport and sales branches in local areas) starting from 2012. Asiana Airlines has conducted multiple fuel-reduction activities and have done our best to satisfy all required target. ◦ Emission Trading System

Asiana Airlines is designated as Emission Trading System-administrated company in 2014 and has to observe the system since 2015. At the present time, 525 Korean companies participate in ETS. The Government assigns the legal limit on the quantity of GHG to companies and allows them to trade surpluses or shortages. Asiana Airlines is conducting various fuel reduction activities consistently to reduce GHG. ◦ EU-ETS

Since 2012, global commercial/non-commercial airlines operation flights in Eu member countries all joined the Eu ETS. Asiana Airlines also joined this scheme to be assigned the

ENVIRONMENT & SOCIAL RESPONSIBILITY

62

emissions quotas for 2012-2020. When assigned emission right remains, we sell it and when we are short of emission right we buy it to secure the same emission right as the emission quantity of the last year. On november 2012, the ICAO(International Civil Aviation Organization) general assembly concluded to set up International standards on GHG emission and as such the system was to be applicable only for intra-European flights. As of April 3rd, 2014, upon the voting result of Eu Commission, the system is to be extended to 2016. However, regardless of the suspension, Asiana Airlines manages procedures such as GHG emission monitoring, report and verification. ◦ Voluntary Agreement for GHG Reduction

In July 2010, Asiana Airlines signed a voluntary GHG reduction agreement with the Ministry of land, Infrastructure and Transport to set the GHG reduction target by renewing the agreement regularly and works to reach the target. For 2012, the year for the 2nd voluntary agreement renewal, the company was required to improve its fuel efficiency and exceeded the target far above to have the honor of being selected as the airline with the highest fuel efficiency. In 2014, Asiana Airlines signed 5the agreement and set its target to improve its international line fuel efficiency by 2.0% against the baseline year. because the method of target setting in international treaty is expected to change from fuel efficiency to quantity of emission, we prolonged the period of agreement from one year to two years.(January 1, 2015~December 31, 2016)

The quantity of GHG Emission and Reduction Activities ◦ GHG Emission Control

Asiana Airlines’ annual GHG emission is based on the volume of fuel used in both domestic and international flights and Data of overall emission has been verified by external auditing bodies for Data credibility. GHG Emission Trend Classification

2010

2011

2012

2013

2014

Aircraft Emission(tco2)

5,020,748

5,371,480

5,604,703

5,995,446

6,180,346

◦ GHG Reduction Activities

Asiana Airlines has set up ‘Fuel Management Committee’ as a way to concentrate its fuelmanaging capability and to coordinate and promote inter-team opinions and information exchange to optimize communication for better business decisions. The committee opens a meeting more than once a month. In 2014, Asiana Airlines launched a campaign which was named ‘Green Flight 3’(Activation of Short-Cut, Green Taxi, Minimum APu usage) and is carrying out the fuel reduction activities from the steps of preparation before takeoff to the maintenance after landing.

63

Asiana Airlines Sustainability Report 2015

Aircraft GHG Reduction Trend

< unit : 1,000 ton >

Classification

2010

2011

2012

2013

2014

Amount of CO2 Reduction

79

83

105

120

125

Activities for GHG Reduction

Economic Flight, ● Procedure Improvement

19%

● Optimal Fuel load Management

19%

7% Engine Washing ●

13%

Activities for GHG Reduction

2% 1%

● Payload Weight Accuracy

● Center of Gravity Placed in the Aircraft Rear ● Minimum Over-fueling

10%

10% Weight Management ●

19%

● Minimum APu usage ● Fuel-Saving Flight Procedure

We are implementing a series of fuel conservation activities such as optimized flight planning and operation procedure for fuel saving and economical flight. Optimal flight planning includes reasonable fuel load based on statistical analysis of flight history data, and selection of most economical route from various possible routes in the planning phase. Flight procedures for fuel saving and economical operations refer to keeping economical altitude, and short-cut flight whereby the shortest airways are taken as a route depending on flight conditions.

ENVIRONMENT & SOCIAL RESPONSIBILITY

64

◦ Engine Water Wash

Asiana Airlines has been doing engine water washes. We introduced a state-of-theart engine washing equipment manufactured by lufthansa. Engine cleaning increases the engine compressor efficiency, improves air flow, reduces green house gas (GHG) emissions, and enhances fuel efficiency. Engine water wash is being conducted in consideration of the aircraft operation plans and it was performed 374 times in 2014 and 392 times are planned in 2015. Year

2010

2011

2012

2013

number of Times

267

290

327

350

2014 374

Reduced Cost(KRW 1 million)

3,850

3,503

4,324

4,347

4,928

◦ Weight Management

Weight management activities to improve fuel efficiency include application of lightweight carts, center of gravity placed in the aircraft rear, usage of lightweight containers and weight reduction of tax-free books in the airplanes. Optimal weight management is being conducted by placing the center of gravity in the rear part of the aircraft, in a way that reduces fuel consumption and ensures flight safety. ◦ Electric Car Operation

To reduce the amount of GHG generated in the process of support operations such as ground aircraft maintenance, Asiana Airlines has introduced electric vehicles for maintenance support in the airport area. At the present time, a total of 10 electric cars are in service. Vehicle Model

Number of Units in Service

Operating Places/Teams

Change (Introduced in October, 2011)

7

6 at Incheon Airport 1 at Gimpo Airport

Electric Car (Renault Samsung) (Introduced in January, 2014)

3

1 for Incheon Safety Management Team, 1 for Gimpo Safety Management Team, 1 for Incheon Cargo Service branch (Incheon Passenger Terminal, Gimpo Passenger Terminal, Incheon Cargo Terminal) * Charging Stations: Three Places

Environmentally-friendly Flight Asiana Airlines is running an organization consisted of experts to concentrate on fuel reduction and fuel efficiency improvement, and have established management items for monthly based performance management. Asiana Airlines has set up ‘Corporate Fuel Management Committee’ to encourage the participation of all the employees. The committee shares the team(or division) performance and draws improvement methods or study new reduction methods through monthly meetings. 'Economic Route Creation Task Force' in the committee searches for a new economic route consistently. We also share information about in-flight route distance reduction for a quick application to the field. In 2014, we focused on three types of eco-friendly operation. The first is Observing one Engine Taxi-in procedure when moving on the ground after the landing. Secondly, inducing the use of Ground Power unit(GPu) instead of shortening the time to use Auxiliary Power unit(APu) on the ground. Thirdly, And lastly, using a route shorter than the designated one in-flight by requesting to air-traffic control agencies. In 2015, we will put in two additional

65

Asiana Airlines Sustainability Report 2015

items which are setting up an optimized flight plan and drag reduction and will start applying them from September. In 2014, Asiana Airlines has introduced a policy to provide three percent of operation flight fuel as compensated fuel which is a international standard. The policy includes advanced flight monitoring and safety operation scheme to select an alternative airport in the route. We have our aircraft engines water washed twice a year to get rid of fine dust and stickum. That helps improve engine performance and save fuel. In 2015, Asiana Airlines is also going to have its aircrafts' body washed. As for A321-200, which will be introduced in 2015, we will reduce between three to four percent of fuel by installing Sharklet, which reduces drag. In 2014, for the effective management of weight, we reduced the number of unused seats for crews in cargo airplanes. We also installed removable foot rests in A330 and removable oven on domestic routes. In 2015, we will change the material of tax free magazines to reduce weight and will carry out placing the center of gravity on the rear of the airplanes on Incheon-Europe route to improve fuel efficiency. ◦ Fuel Reduction Activities In 2014 • Reduce route distance, Reduce the time • spent using auxiliary power unit

s

• Select the type of airplane and route and Recheck two hours before departure

Fuel Reduction Activities

W ate rW ash E ngine

• Operate Economic Route Task Force • Analyze and search optimized • economic routes

p rou nG Operate Discussio

• Operate Corporate Fuel • Management Committee • Adjust opinions with • head office/division monthly, • take charge of • decision-making

Flight P Load lan t Am o M ou n

ize im in Gaps t

Flight een n r t G aig en mp a

Imp lem 3C

• Select and reward superior • pilots and proposers

• Minimize weight gaps between flight • plan and final loading(passenger+cargo) • to save fuel

Get rid of fine dust and stickum in the engine to improve engine performance and save fuel

Effi cien licy t Fuel Loading Po

• Introduce a new international standard policy to • provide three percent of operation flight • fuel as compensated fuel

◦ 2015 Plan

Fuel Reduction Target

Reinforce the management of existing reduction items & Develop new reduction plan

• Select optimized short distance alternative airport

Reduce Drag

Install Sharklet which Reduces drag by vortex occurred at the edge of wings to the A321-200 to save 3~4% of fuel

Introduce Additional New Fuel-efficient Aircraft

Introduce additional 3rd and 4th A380

place the center of gravity on the rear of an airplane

Fuel saving gets easier when placing the center of gravity on the rear of an airplane Applied preferentially on Europe routes

Hold Green Flight 5 Campaign (September~ November, 2015)

Water wash engines and bodies. Develop optimized flight plan for route distance reduction, Green Taxi, Reduce APu usage time

ENVIRONMENT & SOCIAL RESPONSIBILITY

Environment Control

66

To minimize environmental impact unavoidably arising out of its business operation, Asiana Airlines has set the target of keeping its pollutant emissions within 50% of the legal limit. To meet the target, the company is applying optimal green technology best suited for each process, and its actual pollutant density remains lower than 25% of the legal limit. Recognized for its strenuous pursuit of green management including minimization of impact on environment through efforts to improve environment, Asiana Airlines has been designated as ‘green company’ by the Ministry of Environment. As for controlling environmental issues, we apply more stringent standards of our own, apart from regulatory requirements. Thanks to the efforts, Asiana Airlines has had no environment accidents for 15 years in a row from 2000 to 2014.

Energy Consumption Control Asiana Airlines’ energy consumption slightly rose year-on-year in 2014 due to the growth of our business. Electric power is usually used for working activities in buildings. lnG is primarily used for heating and cooling but it is also consumed for boilers and cooking. The Incheon worksite(youngjong Island) uses steam and electric power supplied by Incheon Airport Energy(a combined heat and power generation plant) nearby because of geographical proximity. Water Usage Incheon District Asiana Town

Gimpo District

2012

2013

2014

< unit : ton >

Classification

2012

2013

2014

Asiana Town

99,236

98,057

99,707

Gimpo District

22,990

22,897

16,064

Incheon District

76,481

88,871

106,569

Power Usage Asiana Town Incheon District Gimpo District

2012

2013

2014

< unit : kwh >

Classification

2012

2013

2014

Asiana Town

20,566,732

20,953,062

Gimpo District

4,472,010

4,112,382

3,711,734

Incheon District

11,320,805

13,470,018

14,914,237

20,117,541

LNG Usage Asiana Town

Gimpo District

2012

2013

< unit : m3 >

Classification

2012

2013

2014

Asiana Town

684,239

679,980

629,079

Gimpo District

402,101

422,034

333,629

2014

Steam Usage Incheon District

2012

2013

2014

< unit : Gcal >

Classification

2012

2013

2014

Incheon District

3,868

4,279

4,103

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Asiana Airlines Sustainability Report 2015

Water Most of the wastewater generated from business activities goes to wastewater treatment facility. Through strict treatment process, Asiana Airlines observes regulations required by law. We entrust all the high density wastewater to the specialized company to ascertain whether the specific harmful materials are treated properly. We provide active investment plan for treatment operation equipment and reflect it in our operation. Inflow and outflow in the wastewater treatment facility is monitored everyday. besides the regular measurement, we check the wastewater treatment by installing the TMS in the 1st and 2nd hangar in Incheon. Water Pollutants < Density : mg/l >

Classification Gimpo Hangar

1st Hangar in Incheon

Legal Limit

2010

2011

2012

2013

2014

COD

130

13.61

13.46

8.57

12.73

14.4

SS

120

11.57

20.06

11.55

13.8

9.28

1,052

1,324

1,270

959

783

2.78

2.55

3.38

2.17

2.11

Water Flow(㎥) COD

20

SS

20

Water Flow(㎥)

1.46

1.59

1.29

1.49

2.04

1,566

1,203

1,028

807

599

※ 2nd Hangar in Incheon(as of 2014) *COD: 1.89 mg/l, SS: 1.79 mg/l

Air Air Pollutants are mainly generated from aircraft maintenance. Asiana Airlines established pollution control facilities in each maintenance site for the efficient control of pollutants and the improvement of site environment. We monitor emission control system daily(also monthly and ad hoc) to manage the legal limit of pollutants. Aiana Airlines confirms whether the facilities work properly through the regular measurement to minimize the emission of pollutants at the site. Air Pollutant Emissions

< unit : Kg >

Classification

2010

2011

2012

2013

Gimpo Hangar

161.76

127.31

202.78

81.40

2014 84.14

1st Hangar in Incheon

389.05

408.1

355.10

307.73

603.97

2nd Hangar in Incheon

-

-

-

-

181.32

note) increased pollutant emissions at the 1st Hangar in Incheon in 2014 was due to the increase of heavy maintenance of aircrafts(sanding, painting etc.)

Waste Asiana Airlines makes sure that different kinds of wastes are not mixed. We sort them out according to related teams and each team is responsible for observing the waste management law and internal regulation of waste treatment process. To minimize the waste generated in workplaces, each department set an annual target and performs monitoring consistently according to the reduction plan. Maintenance process generates certain kinds of wastes by nature. We examine whether they are recyclable and if they are deemed safe,

ENVIRONMENT & SOCIAL RESPONSIBILITY

68

advise employees to recycle them. Asiana Airlines is raising its recycling rate gradually. Recyclable wastes are sorted again so as to reduce the incineration and the cost incurred. Waste Amount and Recycling Rate Classification

2010

2011

2012

2013

2014

Total Waste(tons)

4,913

5,464

5,601

6,152

6,227

Recycling (tons)

3,350

3,644

3,819

4,989

5,024

Recycling Rate(%)

68.2

66.7

68.2

81.1

80.68

Noise Asiana Airlines applies nADP of ICAO(International Civil Aviation Organization) for the airports which have noise reduction regulations. Airbuses and boeings that we possess(50, 34 airplanes each) meet the standards of ICAO AnnEX 16 Volume 1, which prescribe the grades of aircraft noise. * nADP: noise Abatement Departure Prodedure

Chemical Materials Asiana Airlines has built an inventory of chemicals it handles and keeps to improve chemical material handling standard according to the 'Chemical Material Control Act' and 'Chemical Material Registration and Evaluation Act', which have newly been applied since 2015. We offer regular educations for the departments that handle chemical materials to raise awareness of related laws. As for Explosive or inflammable materials, we perform active examinations to find alternative ones. We have introduced AMIGOS-II system that keeps the record of chemical materials for the strict management of the 'special material' prescribed by Industrial Safety and Health law. For the sites which handle chemical materials, Asiana Airlines has established emergency training guideline. We confirm whether there are disaster protection equipments in workplaces to prevent secondary environmental incident. When discarding chemical materials that are past their expiration date, we let the related team examine the Material Safety Data Sheet(MSDS) about the materials because there are possible dangers (a fire etc).

Green Purchase As the interests on environmentally-friendly goods gradually rise, Asiana Airlines tries to use them evenly in applicable areas. We plan to purchase green products to the extent of not hurting safety flight. < unit : Item - Items, Spend - KRW 1 million >

3,153

3,539

3,668

Green Products etc.

< unit : KRW 1 million >

Spend 2012

2013

Classification

2014

2012

2013

2014

Item

Spend

Item

Spend

Item

Spend

32

3,153

31

3,539

27

3,668

69

Green Campaigns Asiana Airlines runs a range of programs to engage customers as well as its employees in Green-Friendly Campaigns. The company waged a campaign to promote green flight and conducted corporate fuel reduction campaigns that was appealed to the general public. ◦ Participation in Creation of Eco-Park

Since 2012, Asiana Airlines has been planting trees at an eco-park built on a reclaimed land near metropolitan areas which takes place in Arbor Day every year. Following 2013, its employees took part in the event organized by Metropolitan Area landfill Site Management Corporation in 2014. It will endorse creation of the eco-park as well as environmental preservation based on ongoing participation.

김포 ⇨ 하네다





147㎏

김포 ⇨ 북경





858㎏

인천 ⇨ 파리





951㎏

인천 ⇨ LA

기후변

135㎏

탄소배



탄소배



탄소배

◦ Greenhouse Gas Reduction Program and Carbon Labelling

탄소배

EnvironmentallyFriendly Activities

Asiana Airlines Sustainability Report 2015



대응

60㎏

김포 ⇨ 제주

All employees in Asiana Airlines should identify the volume of carbon offset as a way to offset greenhouse gas generated by Asiana flights for their business trip. In 2014, 3,157 tons of greenhouse gases were offset and a total of 18,048 tons of the gas has been offset from May 2008 through the end of 2013. based on its commitment to greenhouse gas reduction and building of greenhouse gas database, the company started to disclose information on emissions of greenhouse gas generated in its production process, earning carbon labelling on flight routes from Korea Environmental Industry & Technology Institute(KEITI). The Gimpo-Haneda route was the first to be accredited in 2009 and up until 2013, a number of routes including the Incheon-los Angeles route have been accredited. Gimpo-Jeju route accreditation was renewed In 2014.

ENVIRONMENT & SOCIAL RESPONSIBILITY

Social Responsibility

70

Asiana Airlines will fulfill its social responsibility consistently engaging customers and employees to create a beautiful world where all of us across the globe can lead a happy and fulfilling life.

beautiful Corporation



Beautiful Sharing

Social Responsibility • Distribution + Genuine Commitment • Genuine Contribution, Spread Culture of Sharing

Beautiful Classroom

Beautiful Environment

Donation for Education • Dream + Knowledge

beautiful People

• Children & youth

Environment Management • Environment + Future

• Investment for the Future

• lead Environmental Protection

Develop Culture • Sensitivity + Spirit

Beautiful Culture

• Preserve Cultural Properties, Mecenat Sponsorship

Beautiful Sharing Asiana Airlines is reaching out to our neighbors in need with compassionate ‘beautiful love’ through a range of social responsibility initiatives such as unICEF spare coin collection, Asiana bazaar, 1 Company 1 Village, Meal of love, Salary round-off donation in combination with overseas campaigns such as support for the Aeta tribe of the Philippines, love House project in Vietnamese communities suffering from extreme poverty. ◦ UNICEF Spare Coin Collection

Asiana Airlines has been working with the Korean Committee for unICEF (united nations Children’s Fund) to jointly carry out the ‘Change for Good’ campaign. The campaign was launched to prevent spare notes and coins in foreign currencies at the end of customers' journey from not being spent and discarded. The campaign was started on international flights in 1994 and has grown into the most representative social campaign waged by Asiana Airlines. In 2014, the accumulated amount of money exceeded KRW 10 billion. < unit :100 million KRW >

Accumulated Amount of Money

1994

1998

2002

2006

2010

2012

2014

1.6

10

20

30

50

70

100

71

Asiana Airlines Sustainability Report 2015

◦ Asiana Bazaar

Asiana Airlines holds a bazaar where all employees donate one item per person and participate by selling food and goods collected during the campaign. The bazaar has grown beyond a corporate event to become an inclusive community festival that invites the underprivileged and entertains participants to help them enjoy their time together. The money was spent to support children in troubled families, the physically or mentally challenged, and the campaign to preserve the world’s cultural heritages. ◦ 1 Company 1 Village

The senior executives and employees of Asiana Airlines have been visiting Sanchoeul village in Hongcheon, Gangwon Province, the sister village of Asiana Airlines, twice a year with their family members for volunteering works since 2006. Asiana has also signed an agreement with the village to buy germinated brown rice for the first-class in-flight meals, promoting the specialty product of the community and developing its economy, and to grant scholarship to students from troubled families in Hongcheon every year. Thanks to Asiana Airlines bringing much benefit to Sanchoeul village, the 1 Company 1 Village campaign has been named as the best practice receiving the ‘Rural Community Contribution Certification’ award and ‘The Order of Industrial Service Merit’ from the Ministry of Agriculture, Food and Rural Affairs in 2014. ◦ Meal of Love(愛)

Since 2007, Asiana people have donated a portion of their salary to support a campaign that provides lunch for low-income family children living in Gangseo district. Since 2011, Asiana Airlines delivered breakfast to the children in need. Meal of love was organized jointly with Seoul Gangseo District Office of Education and Community Chest of Korea with the aim to provide breakfast to low-income family students. Asiana Airlines is actively making a contribution to this drive as the one and only private corporate sponsor. ◦ Moneybox of Love

The Moneybox of love campaign was originally launched by airport service staffs in 2008. Starting from 2011, the campaign has grown to an enterprise-wide scale that encompasses all of Asiana offices both home and abroad. The money collected by our employees during a year is spent for various social outreach activities. ◦ Salary Donation

Employees of Asiana Airlines have participated in the donation campaign called ‘Salary Round-off’ since 2006. They set aside money less than KRW 1,000 from their salaries and donated the money to the fund for neighbors in needs. Since 2014 the campaign has revised to raise money from employees( KRW 1.000 each, from their Salaries). Asiana also provides 100% matching grants to support the employees’ charity efforts. The fund is spent helping out more disadvantaged people in our communities, that includes providing breakfasts to low-income family children and giving scholarships for the grandparentgrandchildren families. in order.

ENVIRONMENT & SOCIAL RESPONSIBILITY

72

◦ Social Work Volunteering in Relay

Asiana people participate in social volunteering campaigns in relay. We visit Pinetree Home, Gangseo Children’s Center, boocheon Hyerimwon and yangcheon Migrant Workers’ Center to spread the culture of ‘beautiful Sharing’ across our communities. Since 2014, we added 'Home Repairing of Hope' campaign to help improving the residential environment of lower economic class. ◦ On Board Outreach Initiative

Starting with Save the Children’s ‘Knit One, Save One’ campaign that had been well received by passengers in 2011, Asiana Airlines has launched a series of monthly campaigns to involve more customers. Asiana Airlines formed Onboard Outreach Team in charge of designing onboard social contribution programs to invite long-haul passengers to a good cause. ◦ Supporting for Aeta Tribe in the Philippines

As part of the 1 Company 1 Village campaign, Asiana Airlines established partnership in 2011 with the Aeta village and has been supporting them consistently with KOICA. Asiana people visited the village to build water pumping facilities, improved houses, public safety facilities and offered education about advanced agriculture and stockbreeding to help them to become more self-sufficient. ◦ Love House in Vietnam

The corporate volunteering club for flight attendants, OZ-unICEF, has built houses for extremely poor families in ben Tre Province under the partnership that goes back to 2004. In 2013, the 42nd love House was successfully completed and donated to the community with money raised by club members. To show Asiana fully backs the good cause, it offers monetary support and also flight tickets to Vietnam once a year to let club members see the impact they’ve created for the community in person.

Beautiful Classroom Asiana Airlines is working hard to open a brighter future for our youths. ‘ Saekdong-narae Class ’ has been opened with the company club ‘Asiana Dream Catchers’ (education donation) visiting schools and giving lectures on career in the aviation industry. ‘Dream Festival’ is, especially, the largest educational event in Korea that combines cultural performances with career lectures. Asiana has also designed other educational programs to find the right career path for students interested in the aviation industry. ‘beautiful Class’ of Asiana Airlines is an initiative to help youths home and abroad unlock their potential and achieve their dreams.

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Asiana Airlines Sustainability Report 2015

◦ Saekdong-narae Class

Asiana Airlines has formed a education donation group consists of lecturers who are experienced in their career fields to visit schools and give career lectures to students interested in aviation professions. In recognition of our hard work, we were awarded 'Education Donation Grand Prize' by the Ministry of Education in 2014. ◦ Dream Festival ‘Dream Festival’ is the largest educational event in Korea that combines culture and art performances with a career class to help relieve stress of students pressured to maintain good academic performance all the time, and fulfill their curiosity about their potential careers. Sponsored by Seoul Foundation for Arts and Culture, ‘Dream Festival’ first took place in the yeongdongpo Art Hall in February 2013. The second festival was held in Guro-Art Valley in December 2013. In December 2014, the third festival was held at the national Theater. ◦ Beautiful Class for China

Asiana Airlines, as the airline that has the widest Korea-China flight network, set off to

Beautiful Classroom Project in China No.

School Name

Donation

3

The 5th junior high school in Tumen city, yanji 40 computers, 1,000 books, 1 piano, 1 beam Ethnic Korean school in Jiutai city, projector, etc Changchun 50 computers, 1,000 books, 1 piano, 9 beam banyuewan primary school in Wei Hai projectors, school bags/stationery items, etc

4

laotunhuyzhen central primary school in 42 educational computers, 1,000 books, 1 piano, 1 Dalian beam projector, 1 photocopier

5

Mupingqu Dayao junior high school in yantai city

51 educational computers, 1,000 books, 1 piano

6

yongfeng primary school in Pukouqu (浦口區), nangjin city

36 educational computers, 1,000 books, 1 piano, 15 Guzhengs(Chinese Zither)

7

Fengdong Xincheng Cheliang primary school in Xishensinqu, Shaanxi province 61 computers, 1,000 books, 1 piano, etc

8

yueyahe primary school in Hebeiqu, Tianjin city

5 multimedia sets, 12 computers, 1 piano, 1,000 books and soccer team uniforms

●7

9

Xiangganglu primary school, Qingdao city

49 computers, 1 piano, 1,000 books

●8

10

Dahu secondary school, Changsha city

63 computers, 1 piano, 1 beam projector, basketball team uniforms

11

Ethnic Korean primary school, Wuhan city, Harbin

30 computers, 1 lED display, 120 desk-chair sets, 1 educational entertainment set

12

Ruixing primary school in Shenzhen city 50 computers, 20 electronic organs, 1,000 books

13

Shiyang primary school, Dujiangyan, Chengdu city

Construction of 3 volleyball courts, 1 basketball court, nets, goal posts, 1 piano, 500 books, 20 volleyballs, 43 volleyball uniforms

14

yucai primary school, Qixing district, Guilin city

11 computers, 2 pianos, 4 multimedia sets, 500 books

15

Chen Jingrun middle school Dijing branch, 49 computers, 1,000 books, 1 piano beijing

16

Quianfeng primary school, Guangzhou

1 2

20 computers, 1 beam projector, 1 air conditioner

17

Ertang primary school, Chongqing

30 computers, 2 lED displays, electronic book system

18

Xuesongru primary school, Shenyang

60 computers, 1 piano

19

Sanyang school, Huangshan

5 computers, 1 piano

20

Wanping school Shanghai

1 piano, 10 sets of multimedia system, 10 blackboards

21

Caihe experimental primary school, Hangzhou

45 computers, 1,000 books, 1 piano, 200 model airplanes

● 11

● 1

●2 ● 18 ● 15 ●4

5 ● ●3 ● 9

●6 ● 19 ● 20 ● 21 ● 17

● 13 ● 10 ● 12 ● 16 ● 14

ENVIRONMENT & SOCIAL RESPONSIBILITY

74

establish a sister network of schools to implement the ‘beautiful Class’ project across China in 2012. The project is about forming partnership with Chinese schools in need to donate necessary educational materials and supplies. Raising the fund with KOICA, Asiana Airlines donated computers, pianos and other learning equipment to schools in seven Chinese cities including , beijing, Guangzhou, Chongqing, Shenyang, Huangshan, Shanghai, Hangzhou , and gave lectures when flight attendants of Asiana visited the schools themselves in 2014. From 2012 to 2014, Asiana gave support to 21 Chinese schools. The campaign will be continued in 2015 to cover more students in China. ◦ Flight Attendant Class & Global Manner School

Asiana Airlines offers a flight attendant class to high school students who wish to become flight attendants in the future. Participating students can experience what it’s like to be a flight attendant in the Asiana Training Center. For high school students wishing to get a job instead of going to college after graduation, Global Manner School has been opened to teach good manners for job interviews and image making.

Beautiful Earth We engage ourselves in a wide range of environment improvement initiatives such as installing eco-friendly solar street lamps in the cultural heritage sites all over the world, cleaning river across the country (‘Forriver Forever’) and etc. ◦ Eco Solar Light

One solar energy street lamp installed by Asiana Airlines can reduce 203kg of CO2 per year compared to an incandescent light bulb. The impact is equivalent to planting 82 pine trees. In partnership with KOICA, Asiana Airlines has installed 51, 41 and 26 solar-powered street lamps in Cambodia, Vietnam and Jakarta respectively. We build solar-powered street lamps near the world’s cultural heritage sites of these countries to safeguard both invaluable culture and environment. ◦ Forriver Forever

Asiana Airlines clean the areas along major rivers (Han River, Keum River, yeongsan River, Kumho River, nakdong River) and riverbeds of Korea. Championed by Asiana people working at domestic offices and airports, the green initiative organizes activities such as picking up garbage, pulling out weeds and planting flower to make our rivers cleaner.

Beautiful Culture ◦ AISFF

Asiana Airlines has organized AISFF(Asiana International Short Film Festival) since 2003, which marks its 12th anniversary in 2014. The festival was launched to encourage production of short films and independent films, and give more chance to talented movie directors who get relatively less attention from the public. AISFF is the first and one of the biggest international short film competition festival in Korea. AISFF has become stable and

75

Asiana Airlines Sustainability Report 2015

fruitful by consistent hosting and support. ◦ Asiana Carole

In 2014, Asiana Airlines selected physically challenged musicians with talents and produced first Asiana Carole entitled 'Christmas with you' to share the music with all its employees. ◦ Guardian of Cultural Heritage

Asiana people and their families visit four royal palaces of Korea(Deoksu, Gyeongbok, Changdeok, Changgyeong) and Jongmyo(a Confucian shrine for the Joseon Dynasty) on a regular basis having a tour guided by cultural heritage experts and cleaning the areas to better the environment. ◦ Nurturing Music Prodigies

Asiana Airlines sponsors a musical instrument bank which rents out instruments to music talents to find and develop prodigies of Korea. ◦ Culture and Art Sponsorship

Asiana Airlines offers sponsorship to those who have made great contribution to development of culture, art and sports of Korea and raise the country’s standing on the global stage. We are trying to carry out our social responsibility through various Mecenat activities.

76

APPENDIX

77 Financial statements 86 GRI G3.1 Index & Alignment with 86 ISO 26000 90 Organization Chart 91 Third-Party Assurance Report

77

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Consolidated Financial Statement

< Unit : KRW >

27th Period

26th Period

25th Period

Assets Current assets

1,328,336,817,242

1,466,671,685,608

1,064,537,579,653

Cash and cash equivalents

262,869,886,514

498,919,161,282

162,787,126,531

Short-term financial instruments

306,681,020,000

204,166,780,000

73,633,960,000

Financial assets at fair value through profit or loss Trade receivable

16,074,709,900 388,085,788,016

383,522,272,645

424,959,115,021

Other receivables

29,441,044,713

32,299,738,477

27,609,992,058

Accrued income

19,265,792,347

20,582,520,140

23,036,290,392

792,616,817

23,637,085,863

22,407,504,350

Advance payments

46,701,171,670

58,387,141,441

106,317,989,043

Prepaid expenses

69,892,777,670

61,478,468,446

59,061,088,052

2,040,195,087

2,416,539,879

Short-term loans receivable

Liquidity available-for-sale financial instruments

1,822,908,411

Prepaid taxes

2,505,729,470

Current tax assets Inventories Other current assets Non-current assets Long-term financial instruments

1,162,530,006

1,780,827,381

287,861,217

182,764,794,508

178,755,248,735

161,225,835,022

276,047,200

1,102,246,111

794,278,088

6,883,260,955,580

5,545,335,886,411

5,021,824,272,891

227,500,000

34,500,000

34,500,000

Available-for-sale financial assets Investments in jointly controlled entities and associates Long-term loans receivable

320,637,663,502

278,234,247,559

254,256,905,361

382,871,764,053

396,926,308,229

141,855,755,959

1,824,844,731

39,980,000

53,850,079,443

Guarantee deposits

449,461,397,501

452,593,085,830

420,005,795,046

Long-term prepaid expenses

160,217,328,737

190,972,115,072

221,777,052,133

Deferred income tax assets

169,984,873,660

129,557,247,022

45,750,633,145

Property, aircraft and equipment

5,061,892,428,127

3,757,361,448,117

3,554,271,658,779

Investment property

125,801,906,672

128,225,842,074

130,481,669,012

Intangible assets

209,372,285,189

209,881,151,625

197,786,708,327

968,963,408

1,509,960,883

1,753,515,686

8,211,597,772,822

7,012,007,572,019

6,086,361,852,544

Other non-current assets Total assets

APPENDIX

78

Consolidated Financial Statement < Unit : KRW >

27th Period

26th Period

25th Period

2,366,458,304,526

2,048,713,145,130

2,028,486,896,102

156,358,158,393

167,170,456,482

267,036,272,591

Liabilities Current liabilities Trade accounts payable Short-term borrowings Advance receipts Unearned income Withholdings Other payables

68,813,552,380

50,000,000,000

1,000,000,000

294,579,205,404

255,122,301,435

265,260,956,577

16,761,100,401

12,951,703,332

2,287,731,407

46,439,232,387

33,461,769,488

29,603,442,295

361,683,773,098

287,448,769,278

308,589,373,905

Accrued expenses

99,001,166,184

85,915,169,929

96,348,713,964

Income tax liabilities for the year

6,850,912,340

6,041,173,684

5,179,618,718

Taxes withheld

132,424,968,313

130,447,617,012

118,187,311,175

Current portion of debentures issued

703,789,669,073

493,469,791,406

526,379,839,295

Current portion of long-term borrowings

321,497,696,732

405,859,012,947

286,064,859,052

Current portion of obligations under financing leases

158,258,869,821

116,666,455,209

122,548,777,123

Non-current liabilities

4,726,016,690,431

4,059,982,949,503

3,052,984,973,500

Debentures issued

1,229,092,955,241

1,410,970,336,764

923,550,579,485

719,096,611,165

672,759,157,271

795,916,828,448

Current portion of financial derivative liabilities

Long-term borrowings

4,158,924,928

Obligations under financing leases

989,653,180,461

623,504,749,965

608,287,244,705

Defined benefit liability

278,348,150,338

215,695,408,667

202,035,941,066

Long-term advance receipts

468,793,381,381

432,833,708,208

385,656,940,586

Long-term unearned income

265,083,576,294

255,482,811,552

3,728,487,038

76,606,615

9,686,343,182

18,815,340,587

Long-term other payables Deferred income tax credits Provisions Other long-term liabilities Total liabilities

143,500,352,959

53,293,721,386

99,979,796,340

104,744,100,576

63,484,898,907

532,392,079,637

281,012,611,932

51,508,712,678

7,092,474,994,957

6,108,696,094,633

5,081,471,869,602

975,506,825,000

975,506,825,000

975,506,825,000

Equity attributable to owners of the Parent Company Capital stock Capital surplus Other structural elements of capital

1,148,869,102

1,148,869,102

1,148,869,102

(28,488,270,487)

(28,488,270,487)

(28,488,270,487)

Accumulated other comprehensive income (loss)

76,620,305,356

17,672,942,979

22,917,028,208

Retained earnings(Accumulated deficit)

(18,918,277,946)

(65,905,628,767)

29,449,881,616

Non-controlling interest

113,253,326,840

3,376,739,559

4,355,649,503

Total equity Total liabilities and equity

1,119,122,777,865

903,311,477,386

1,004,889,982,942

8,211,597,772,822

7,012,007,572,019

6,086,361,852,544

79

Asiana Airlines Sustainability Report 2015

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Consolidated Comprehensive Income Statement

< Unit : KRW >

27th Period

Sales Cost of sales

26th Period

25th Period

5,836,234,761,575

5,723,506,384,082

5,887,872,743,115

5,186,770,205,133

5,159,649,585,880

5,109,055,196,392

Gross profit

649,464,556,442

563,856,798,202

778,817,546,723

Selling, general and administrative expenses

551,378,544,061

575,091,840,092

599,449,801,304

Operating (loss) income

98,086,012,381

(11,235,041,890)

179,367,745,419

Other operating income

316,837,451,480

359,169,751,542

229,230,561,023

Other operating expenses

264,492,512,193

380,574,222,674

197,053,459,542

Financial income Financial expenses Increased interest in the profit or loss of associates Equity decreased for the profit or loss of associates

17,790,738,344

22,640,762,295

27,129,457,329

152,716,036,287

149,284,939,847

161,600,313,360

31,791,237,208

26,291,720,460

14,004,879,773

6,184,391,890

7,569,996,987

4,545,648,302

Profit (loss) before income tax

41,112,499,043

(140,561,967,101)

86,533,222,340

Income tax expense (income)

22,185,373,555

25,897,062,002

(24,059,906,513)

Profit (loss) for the year

63,297,872,598

(114,664,905,099)

62,473,315,827

62,181,138,535

(115,658,055,999)

61,382,051,563

1,116,734,063

993,150,900

1,091,264,264

43,717,419,351

15,106,259,743

22,349,627,839

Equity holders of the Parent Company Non-controlling interest Other comprehensive income (loss) for the year Subsequently in other comprehensive income are reclassified to profit or loss Loss on valuation of available-for-sale financial assets

83,876,790,955

1,670,529,592

45,407,065,325

(24,964,057,886)

(6,904,089,675)

(752,555,095)

34,629,308

(10,525,146)

(176,858,915)

(15,229,943,026)

20,753,165,890

(21,961,516,810)

(402,820,918)

(166,506,666)

107,015,291,949

(99,558,645,356)

84,822,943,666

105,934,713,198

(100,599,595,612)

83,733,636,062

1,080,578,751

1,040,950,256

1,089,307,604

Basic earnings (loss) per share

319

(593)

317

Diluted earnings (loss) per share

319

(593)

316

Stake in the other comprehensive income of associates Profit/loss on overseas operation Subsequently reclassified to profit or loss unless other comprehensive income Remeasurements of net defined benefit liabilities Equity stake in remeasurements of net defined benefit liabilities of associates Total comprehensive income (loss) for the year Total comprehensive income (loss) attributable to: Equity holders of the Parent Company Non-controlling interest Per share data

APPENDIX

80

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Consolidated Statement of Changes in Shareholders’ Equity

< Unit : KRW >

Equity Shareholders of Parent Company Accumulated Retained Other ComEarnings Components of Other prehensive (Accumulated Equity Income Deficit) Balance at January 1, 2012 916,536,240,000 1,119,928,066 (28,488,270,487) (21,560,623,107) (9,806,103,131) Profit (loss) for the year 61,382,051,563 Capital Stock

Loss on valuation of available-for-sale financial assets Related company’s stake in other profit Comor loss Chang- preExchange differences es in hensive on translation in Equity income foreign operations (loss) Remeasurements of net defined benefit liabilities Related company’s stake in Remeasurements of net defined benefit liabilities Transac- Bond with warrants exercised tions with Acquisition and liquidation of equity subsidiaries holders Dividends Balance at December 31, 2012 Balance at January 1, 2013 Profit (loss) for the year Loss on valuation of available-for-sale financial assets Related company’s stake in other profit Comor loss Chang- preExchange differences es in hensive on translation in Equity income foreign operations (loss) Remeasurements of net defined benefit liabilities Related company’s stake in Remeasurements of net defined benefit liabilities Transac- Bond with warrants exercised tions with Acquisition and liquidation of equity subsidiaries holders Dividends Balance at December 31, 2013 Balance at January 1, 2014 Profit (loss) for the year Loss on valuation of available-for-sale financial assets Related company’s stake in other profit Comor loss Chang- preExchange differences es in hensive on translation in Equity income foreign operations (loss) Remeasurements of net defined benefit liabilities Related company’s stake in Remeasurements of net defined benefit liabilities Transac- Bond with warrants exercised tions with Acquisition and liquidation of equity subsidiaries holders Dividends Balance at December 31, 2014

58,970,585,000

Capital Surplus

975,506,825,000 1,148,869,102 (28,488,270,487) 975,506,825,000 1,148,869,102 (28,488,270,487)

857,801,171,341 61,382,051,563

Non-controlling Interest 3,486,241,899 1,091,264,264

Total Equity 861,287,413,240 62,473,315,827

45,407,065,325

45,407,065,325

45,407,065,325

(752,555,095)

(752,555,095)

(752,555,095)

(176,858,915)

(176,858,915)

(176,858,915)

(21,959,560,150)

(21,959,560,150)

(166,506,666)

(166,506,666)

28,941,036

975,506,825,000 1,148,869,102 (28,488,270,487) 975,506,825,000 1,148,869,102 (28,488,270,487)

Total

(1,956,660)

(21,961,516,810) (166,506,666)

58,999,526,036

58,999,526,036 (19,900,000)

(19,900,000)

(200,000,000) 4,355,649,503 4,355,649,503 993,150,900

(200,000,000) 1,004,889,982,942 1,004,889,982,942 (114,664,905,099)

22,917,028,208 22,917,028,208

29,449,881,616 1,000,534,333,439 29,449,881,616 1,000,534,333,439 (115,658,055,999) (115,658,055,999)

1,670,529,592

1,670,529,592

1,670,529,592

(6,904,089,675)

(6,904,089,675)

(6,904,089,675)

(10,525,146)

(10,525,146)

(10,525,146)

20,705,366,534

20,705,366,534

(402,820,918)

(402,820,918)

17,672,942,979 (65,905,628,767) 17,672,942,979 (65,905,628,767) 62,181,138,535

47,799,356

20,753,165,890 (402,820,918)

(19,860,200)

(19,860,200)

(2,000,000,000) 899,934,737,827 3,376,739,559 899,934,737,827 3,376,739,559 62,181,138,535 1,116,734,063

(2,000,000,000) 903,311,477,386 903,311,477,386 63,297,872,598

83,876,790,955

83,876,790,955

83,876,790,955

(24,964,057,886)

(24,964,057,886)

(24,964,057,886)

34,629,308

34,629,308

34,629,308

(15,193,787,714)

975,506,825,000 1,148,869,102 (28,488,270,487) 76,620,305,356

(15,193,787,714)

(36,155,312)

(15,229,943,026)

108,996,008,530

108,996,008,530

(200,000,000) (18,918,277,946) 1,005,869,451,025 113,253,326,840

(200,000,000) 1,119,122,777,865

81

Asiana Airlines Sustainability Report 2015

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Consolidated Cash Flow Statement

< Unit : KRW >

27th Period

Net cash generated from operating activities Cash generated from operations Interest received Interest paid Dividends received Income tax paid Net cash provided by (used in) investing activities Decrease (increase) in short-term financial instruments, net Proceeds from sales of fair value financial asset

26th Period

373,360,980,922

739,045,604,566

345,691,616,180

488,673,169,066

852,099,170,430

470,390,483,903

19,713,138,849

20,474,135,554

16,074,932,653

(137,053,936,901)

(130,905,295,678)

(125,042,358,459)

10,991,569,456

9,746,989,571

10,201,019,094

(8,962,959,548)

(12,369,395,311)

(25,932,461,011)

(390,470,802,010)

(810,775,118,203)

(620,770,739,639)

(102,400,000,000)

(130,440,000,000)

(37,503,883,117)

3,364,381,681

Others (derivatives) Long/Short-term loans granted Increase in Long/Short-term loans granted

25th Period

(92,505,744,964) (49,373,807)

(15,885,860)

(9,214,945,000)

2,288,757,200

17,400

3,842,532,976

Acquisition of available-for-sale financial assets

(3,009,985,620)

(41,975,677,201)

Disposal of available-for-sale financial assets Acquisition of investments in jointly controlled entities and associates Disposition of investments in jointly controlled entities and associates Purchases of property, aircraft and equipment

55,242,090,914

51,223,008,000

Disposal of property, aircraft and equipment Purchases of intangible assets Disposal of intangible assets Increase in guarantee deposits Decrease in guarantee deposits

(76,271,758,714)

(260,602,084,600)

50,000

15,664,649,056

109,440,000

(332,694,804,781)

(384,966,290,360)

(388,126,708,986)

87,664,672,975

7,448,891,822

6,629,447,639

(4,356,730,398)

(18,779,742,108)

(1,952,818,380)

128,932,000

576,000

(145,054,271,780)

(113,392,083,259)

(152,929,346,182)

124,677,238,320

74,322,409,706

41,653,279,576

Acquisition of other investment assets

(15,000,000)

Acquisition and liquidation of subsidiaries Net cash provided by (used in) financing activities Net increase/decrease of short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowings

(19,900,000) (217,863,436,173)

409,172,098,439

242,828,052,606

(14,000,000,000)

49,000,000,000

(2,294,336,365)

93,095,940,000

104,215,212,578

172,684,530,329

(212,473,496,288)

(81,818,242,392)

(68,417,037,809)

498,119,636,030

820,854,279,022

1,208,110,063,760

Redemption of debentures

(452,499,822,322)

(301,399,409,350)

(1,012,926,504,069)

Payments of finance lease liabilities

(129,905,693,593)

(179,679,741,419)

(112,807,448,240)

(200,000,000)

(2,000,000,000)

Issuance of debentures

Payment of dividends Bond with warrants exercised Net increase/decrease of cash and cash equivalents Cash and cash equivalents at the beginning of year

(200,000,000) 58,678,785,000

(234,973,257,261)

337,442,584,802

(32,251,070,853)

498,919,161,282

162,787,126,531

197,773,237,915

Exchange gains on cash and cash equivalents

(1,076,017,507)

(1,310,550,051)

(2,735,040,531)

Cash and cash equivalents at the end of year

262,869,886,514

498,919,161,282

162,787,126,531

APPENDIX

82

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Statement of Financial Position

< Unit : KRW >

27th Period

26th Period

25th Period

Assets Current assets

856,948,770,852

944,905,100,720

841,188,516,318

146,168,186,575

245,511,127,872

109,144,616,284

Short-term financial instruments

7,426,020,000

7,311,780,000

7,218,960,000

Sales of fair value financial asset

16,074,709,900

328,005,677,219

325,176,822,953

339,130,767,888

Other receivables

27,681,567,805

31,980,961,404

27,410,620,350

Accrued income

18,446,961,630

19,598,351,949

21,726,616,727

Short-term loans receivable

13,268,240,000

13,171,660,000

13,206,420,000

Advance payments

44,980,162,852

55,966,524,754

100,765,455,093

Prepaid expenses

69,827,286,541

64,880,488,107

59,844,238,613

Prepaid taxes

2,035,650,365

1,661,414,515

2,120,238,518

Current tax assets

1,162,530,006

1,741,356,807

287,861,217

Cash and cash equivalents

Sales of current available-for-sale financial assets Trade receivables

Inventories Non-current assets Long-term financial instruments Available-for-sale financial assets Investments in subsidiaries, associates and jointly controlled entities Long-term loans receivable Guarantee deposits

1,822,908,411

180,048,869,548

177,904,612,359

160,332,721,628

5,623,368,897,846

5,109,325,947,265

4,828,299,119,140

22,000,000

22,000,000

22,000,000

310,351,917,330

269,898,378,439

244,958,956,611

603,924,208,656

603,924,258,556

531,824,358,356 51,628,975,739

459,191,226,879

469,518,555,156

439,338,248,873

Long-term prepaid expense

160,167,178,013

190,972,115,072

221,777,052,133

Deferred income tax assets

163,648,328,251

150,188,761,540

120,229,955,238

Property, aircraft and equipment

3,854,454,413,497

3,355,718,973,565

3,153,414,132,054

Investment property

42,397,329,058

43,168,055,134

43,938,781,210

Intangible assets

28,336,884,462

24,669,053,691

19,486,145,842

875,411,700

1,245,796,112

1,680,513,084

6,480,317,668,698

6,054,231,047,985

5,669,487,635,458

Other non-current assets Total assets

83

Asiana Airlines Sustainability Report 2015

Statement of Financial Position < Unit : KRW >

27th Period

26th Period

25th Period

2,009,388,516,618

1,747,810,460,513

1,806,649,135,018

109,785,512,257

128,937,173,414

190,478,439,584

Liabilities Current liabilities Trade accounts payable Short-term borrowings Advance receipts Unearned income

35,000,000,000

50,000,000,000

282,803,064,393

250,658,851,799

260,801,136,613

2,390,651,144

1,692,942,049

2,150,394,649

43,163,295,206

31,274,267,556

27,490,974,773

366,341,664,479

301,228,407,648

318,397,817,136

81,881,839,629

76,546,011,948

85,265,123,725

Taxes withheld

127,537,930,753

126,774,052,300

114,571,773,068

Current portion of debentures issued

370,215,721,281

199,867,158,513

376,575,253,388

95,747,696,732

233,514,012,947

158,564,859,052

Withholdings Other payables Accrued expenses

Current portion of long-term borrowings Current portion of obligations under financing leases Current portion of long-term borrowings with assetbacked securitization Current portion of financial derivative liabilities

158,258,869,821

116,666,455,209

122,548,777,123

336,262,270,923

226,492,202,202

149,804,585,907

Non-current liabilities

3,676,199,516,106

3,491,025,963,051

Debentures issued

413,229,062,944

693,269,985,898

685,764,564,123

Long-term borrowings

703,985,927,512

670,384,157,271

740,291,828,448

Obligations under financing leases

989,653,180,461

623,504,749,965

608,287,244,705

Long-term borrowings with asset-backed securitization

762,766,948,124

755,312,115,021

231,363,799,335

Other long-term employee benefits

4,158,924,928 2,927,209,724,912

231,901,123,213

195,612,615,214

186,168,182,369

Long-term advance receipts

468,793,381,381

432,833,708,208

385,656,940,586

Long-term unearned income

1,736,587,407

2,040,023,367

2,342,630,269

9,659,759,878

18,777,747,174

99,688,294,183

104,470,727,224

63,228,523,258

Long-term other payables Provisions Other long-term liabilities Total liabilities

4,445,010,881

3,938,121,005

5,328,264,645

5,685,588,032,724

5,238,836,423,564

4,733,858,859,930

975,506,825,000

975,506,825,000

975,506,825,000

Equity Capital stock Capital surplus Other components of equity Accumulated other comprehensive income (loss) Accumulated deficit Total equity Total liabilities and equity

1,148,869,102

1,148,869,102

1,148,869,102

(28,488,270,487)

(28,488,270,487)

(28,488,270,487)

104,806,657,303

21,180,210,078

17,455,256,732

(258,244,444,944)

(153,953,009,272)

(29,993,904,819)

794,729,635,974

815,394,624,421

935,628,775,528

6,480,317,668,698

6,054,231,047,985

5,669,487,635,458

APPENDIX

84

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Comprehensive Income Statement

< Unit : KRW >

27th Period

Sales

26th Period

25th Period

5,552,678,452,328

5,463,294,738,859

5,638,068,843,903

4,974,194,328,838

4,999,098,214,281

4,963,954,409,845

Gross profit

578,484,123,490

464,196,524,578

674,114,434,058

Selling, general and administrative expenses

Cost of sales

536,256,012,907

525,785,560,145

541,577,919,938

Operating (loss) income

42,228,110,583

(61,589,035,567)

132,536,514,120

Other operating income

201,296,988,113

364,009,913,004

238,662,962,787

Other operating expenses

253,469,987,893

361,801,055,071

175,809,287,287

9,185,549,987

14,269,522,521

24,165,002,126

134,684,228,845

135,167,639,018

149,524,390,346

(135,443,568,055)

(180,278,294,131)

70,030,801,400 (19,418,551,583)

Financial income Finance costs Profit before income tax (benefit) Income tax expense (benefit) Profit(loss) for the year Other comprehensive income (loss) for the year, net of tax Other comprehensive profit/loss after tax that will reclassified to profit/loss Valuation income (profit/loss) on available-for-sale financial assets Other comprehensive profit/loss after tax that will not be reclassified to profit/loss Remeasurements of net defined benefit liabilities

40,209,023,041

37,179,287,115

(95,234,545,014)

(143,099,007,016)

50,612,249,817

74,569,556,567

22,864,855,909

15,509,727,143

83,626,447,225

3,724,953,346

33,245,674,659

(9,056,890,658)

19,139,902,563

(17,735,947,516)

(20,664,988,447)

(120,234,151,107)

66,121,976,960

Basic earnings per share

(488)

(733)

261

Diluted earnings per share

(488)

(733)

261

Total comprehensive income (loss) for the year Per share data

Statement of Changes in Shareholders’ Equity

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012 < Unit : KRW >

Equity Capital Stock

balance at January 1, 2012

916,536,240,000

Capital Surplus

1,119,928,066

Other Accumulated Other ComComponents of Equity prehensive Income (loss)

(28,488,270,487)

(15,790,417,927)

(62,870,207,120) 50,612,249,817

Profit for the year

Comprehenon valuation of availableChang- sive income lossfor-sale financial assets es in (loss) Remeasurements of net defined Equity benefit liabilities Transactions with bond with warrants exercised equity holders

Accumulated Deficit

33,245,674,659

Total Equity 810,507,272,532 50,612,249,817 33,245,674,659

(17,735,947,516)

(17,735,947,516)

58,970,585,000

28,941,036

58,999,526,036

balance at December 31, 2012

975,506,825,000

1,148,869,102

(28,488,270,487)

17,455,256,732

(29,993,904,819)

balance at January 1, 2013

975,506,825,000

1,148,869,102

(28,488,270,487)

17,455,256,732

(29,993,904,819)

935,628,775,528

(143,099,007,016)

(143,099,007,016)

Profit for the year

Comprehenon valuation of availableChang- sive income lossfor-sale financial assets es in (loss) Remeasurements of net defined Equity benefit liabilities

3,724,953,346

935,628,775,528

3,724,953,346 19,139,902,563

19,139,902,563

Transactions with bond with warrants exercised equity holders

balance at December 31, 2013

975,506,825,000

1,148,869,102

(28,488,270,487)

21,180,210,078

(153,953,009,272)

815,394,624,421

balance at January 1, 2014

975,506,825,000

1,148,869,102

(28,488,270,487)

21,180,210,078

(153,953,009,272)

815,394,624,421

(95,234,545,014)

(95,234,545,014)

(9,056,890,658)

(9,056,890,658)

(258,244,444,944)

794,729,635,974

Profit for the year

Comprehenon valuation of availableChang- sive income lossfor-sale financial assets es in (loss) Remeasurements of net defined Equity benefit liabilities

83,626,447,225

83,626,447,225

Transactions with bond with warrants exercised equity holders

balance at December 31, 2014

975,506,825,000

1,148,869,102

(28,488,270,487)

104,806,657,303

85

Asiana Airlines Sustainability Report 2015

The 27th business Period: as of Dec. 31, 2014 The 26th business Period: as of Dec. 31, 2013 The 25th business Period: as of Dec. 31, 2012

Cash Flow Statement

< Unit : KRW >

27th Period

Net cash generated from operating activities

26th Period

25th Period

326,932,434,441

222,827,653,721

287,104,452,490

Cash generated from operations

425,225,325,124

303,906,206,169

390,612,775,602

Interest received

10,346,609,339

11,901,069,566

13,826,612,796

(134,211,071,595)

(122,322,804,185)

(114,905,884,364)

21,791,569,456

30,796,677,761

14,207,619,094

Interest paid Dividends received Income tax paid Net cash provided by (used in) investing activities

3,780,002,117

(1,453,495,590)

(16,636,670,638)

(192,145,775,829)

(482,739,648,239)

(588,667,037,494)

Decrease (increase) in short-term financial instruments, net

(7,295,005,200)

Acquisition of available-for-sale financial assets Disposal of available-for-sale financial assets Proceeds from sales of fair value financial asset Acquisition of investments in jointly controlled entities and associates Disposition of investments in jointly controlled entities and associates Decrease in long-term loans Purchases of property, aircraft and equipment

(41,885,677,200) 55,242,090,914

51,223,008,000

3,364,381,681 (100)

(82,402,084,700)

(383,357,771)

50,000

15,684,609,156

109,590,000

17,400 (318,541,410,201)

(374,764,751,285)

(379,655,691,308)

Disposal of property, aircraft and equipment

86,417,457,913

606,756,874

6,059,690,747

Purchases of intangible assets

(3,418,313,414)

(5,215,164,137)

(1,860,281,260)

(144,792,485,880)

(110,908,801,249)

(175,153,574,699)

129,453,521,258

74,259,769,702

52,680,006,161

Disposal of intangible assets Increase in guarantee deposits Decrease in guarantee deposits

128,932,000

Disposal of financial derivative trade Net cash provided by (used in) financing activities Net increase/decrease of short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowings Issuance of debentures Redemption of debentures Payments of finance lease liabilities Proceeds from long-term borrowings with assetsbacked securitization Repayment of long-term borrowings with assetsbacked securitization Bond with warrants exercised Net increase/decrease of cash and cash equivalents

(92,505,744,964) (233,103,390,678)

397,500,647,930

299,703,892,454

(15,000,000,000)

50,000,000,000

(1,294,336,365)

93,095,940,000

104,215,212,578

172,684,530,329

(206,003,496,288)

(73,413,242,392)

(59,917,037,809)

99,552,850,000

233,594,902,022

493,692,791,348

(200,000,000,000)

(381,382,659,949)

(408,227,790,794)

(129,905,693,593)

(179,679,741,419)

(112,807,448,240)

398,566,786,030

895,559,377,000

400,163,906,733

(273,409,776,827)

(251,393,199,910)

(243,269,507,748) 58,678,785,000

(98,316,732,066)

137,588,653,412

(1,858,692,550)

Cash and cash equivalents at the beginning of year

245,511,127,872

109,144,616,284

113,562,499,488

Exchange gains on cash and cash equivalents

(1,026,209,231)

(1,222,141,824)

(2,559,190,654)

Cash and cash equivalents at the end of year

146,168,186,575

245,511,127,872

109,144,616,284

APPENDIX

86

GRI G3.1 Index & Alignment with ISO 26000 Reporting level : ● Report, ◐ Partial Report, ○ no Report, - n/A

GRI Index

Description Participation by Stakeholders Boundary Protocol

Reporting Level ●

Reporting Section 18, 19, 21, 28



Cover

Strategy and Analysis 1.1

Statement from the most senior decisionmaker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy



5, 22

1.2

Description of key impacts, risks, and opportunities



36~40, 42, 43

Organizational Profile 2.1

Name of the organization



Cover, 5, 12

2.2

Primary brands, products, and/or services



5~7, 52~56

2.3

Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures



22, 25, 26, 28, 47, 60, 90

2.4

Location of organization’s headquarters



Cover, 12

2.5

Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report



6, 7, 14,15, 72~74

2.6

Nature of ownership and legal form



12, 26

2.7

Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries)



14, 15, 36~40, 55, 56

2.8

Scale of the reporting organization (number of employees, net sales/net revenues, total capitalization broken down in terms of debt and equity, and quantity of products or services provided)



12~15, 28, 36~40, Appendix

2.9

Significant changes during the reporting period regarding size, structure, or ownership



6~9, 12~15, 26~28, 36~41

2.10

Awards received in the reporting period



9, 21, 55, 57, 69

Report Parameters 3.1

Reporting period (e.g., fiscal/calendar year) for information provided



Cover

3.2

Date of most recent previous report (if any)



Cover

3.3

Reporting cycle (annual, biennial, etc.)



Cover

3.4

Contact point for questions regarding the report or its contents



Cover

3.5

Process for defining report content



18, 19

3.6

Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures)



Cover

3.7

Any specific limitations on the scope or boundary of the report



Cover

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations



3.9

Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report



3.10

Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

-

3.11

Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report

-

3.12

Table identifying the location of the Standard Disclosures in the report



Cover, 43

3.13

Policy and current practice with regard to seeking external assurance for the report. Explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organization and the assurance provider(s)



Cover, 91

4.1

Economic value generated and distributed (e.g. revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments)



26, 27

4.2

Financial implications and other risks and opportunities for the organization’s activities due to climate change



26, 27

4.3

For organizations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members



26, 27

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body



26~28

61~69

Governance, Commitments & Engagement

87

Asiana Airlines Sustainability Report 2015

GRI Index

Description

Reporting Level

Reporting Section

4.5

Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organization’s performance (including social and environmental performance)



27

4.6

Processes in place for the highest governance body to ensure conflicts of interest are avoided



26, 27

4.7

 rocess for determining the composition, qualifications, and expertise of the members of the highest P governance body and its committees (gender and other indicators of diversity



26

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation



12, 20, 21, 23, 46, 55, 56, 60, 70

4.9

Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles



12, 20, 21, 23, 42, 43, 46, 55, 56, 60, 70

4.10

Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance



26, 27

4.11

Explanation of whether and how the precautionary approach or principle is addressed by the organization



26

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses



9, 22, 46, 61, 66, 70

4.13

Memberships in associations (such as industry associations) and/or national/international advocacy organizations



7, 9, 15, 22, 24, 46

4.14

List of stakeholder groups engaged by the organization



21, 22, 26~28

4.15

Basis for identification and selection of stakeholders with whom to engage



21, 26, 27

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group



21, 26~28, 56, 70~75

4.17

Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns



18, 19, 22, 24, 27, 28, 56

EC1

Economic value generated and distributed (e.g. revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments)



9, 12, 30, 37~41, 70, 71, Appendix 61~65

Economic

EC2

Financial implications and other risks and opportunities for the organization’s activities due to climate change



EC3

Coverage of the organization’s defined benefit plan obligations



EC4

Significant financial assistance received from government

-

EC5

Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation



EC6

Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation



23, 24, 36~40

EC7

Procedures for local hiring and proportion of senior management hired from the local community at locations of significant operation



28

EC8

Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, inkind, or pro bono engagement



6~9, 49~56

EC9

Understanding and describing significant indirect economic impacts, including the extent of impacts



6~8, 15, 36~41

En1

Materials used by weight or volume



41, 66

En2

Percentage of materials used that are recycled input materials



68

En3

Direct energy consumption by primary energy source



62

En4

Indirect energy consumption by primary source



66

En5

Energy saved due to conservation and efficiency improvements



62~65

En6

Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives



62~65

En7

Initiatives to reduce indirect energy consumption and reductions achieved



62~64

En8

Total water withdrawal by source



66

En9

Water sources significantly affected by withdrawal of water

-

En10

Percentage and total volume of water recycled and reused

-

En11

Percentage and total volume of water recycled and reused

-

APPENDIX

88

GRI G3.1 Index & Alignment with ISO 26000 Reporting level : ● Report, ◐ Partial Report, ○ no Report, - n/A

GRI Index

Description

Reporting Level

En12

Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas

-

En13

Habitats protected or restored

-

En14

Strategies, current actions, and future plans for managing impacts on biodiversity

-

En15

Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

-

En16

Total direct and indirect greenhouse gas emissions by weight



Reporting Section

62

En17

Other relevant indirect greenhouse gas emissions by weight



67

En18

Initiatives to reduce greenhouse gas emissions and reductions achieved



62~65

En19

Emissions of ozone-depleting substances by weight

-

En20

NO, SO, and other significant air emissions by type and weight



En21

Total water discharge by quality and destination



67

En22

Total weight of waste by type and disposal method



67, 68

En23

Total number and volume of significant spills



66

En24

Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally

-

En25

Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff



En26

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation



En27

Percentage of products sold and their packaging materials that are reclaimed by category

-

En28

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

-

En29

Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce



En30

Total environmental protection expenditures and investments by type



60~69

no violations 60, 65

Social : Labor Practices & Decent Work lA1

Total workforce by employment type, employment contract, and region, broken down by gender



28

lA2

Total number and rate of new employee hires and employee turnover by age group, gender, and region



28

lA3

Benefits provided to full-time employees that are not provided to temporary or parttime employees, by significant locations of operation



29~32

lA4

Percentage of employees covered by collective bargaining agreements



31

lA5

Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements



lA6

Percentage of total workforce represented in formal joint management–worker health and safety committees



lA7

Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender



lA8

Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases



32, 33

lA9

Health and safety topics covered in formal agreements with trade unions



32, 33, 47, 48

lA10

Average hours of training per year per employee by gender, and by employee category



30, 48, 49

lA11

Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings



29, 30

lA12

Percentage of employees receiving regular performance and career development reviews, by gender



28

lA13

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity



26, 28

lA14

Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation



30, 31

lA15

Return to work and retention rates after parental leave, by gender



31

31, 32

89

Asiana Airlines Sustainability Report 2015

GRI Index

Description

Reporting Level

Reporting Section

Human Rights HR1

Percentage and total number of significant investment agreements and contracts that include clauses incorporating human rights concerns, or that have undergone human rights screening



30, 31

HR2

Percentage of significant suppliers, contractors, and other business partners that have undergone human rights screening, and actions taken



23, 24

HR3

Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained



25

HR4

Total number of incidents of discrimination and corrective actions taken

-

HR5

Operations and significant suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights



HR6

 perations and significant suppliers identified as having significant risk for incidents of child labor, and O measures taken to contribute to the effective abolition of child labor

-

HR7

Operations and significant suppliers identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of all forms of forced or compulsory labor

-

HR8

Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations



HR9

no discrimination 31, 32

Total number of incidents of violations involving rights of indigenous people and actions taken

-

HR10

Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments



HR11

Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms



28, 30, 55, 56

SO1

Percentage of operations with implemented local community engagement, impact assessments, and development programs



70~75

SO2

Percentage and total number of business units analyzed for risks related to corruption

-

SO3

Percentage of employees trained in organization’s anti-corruption policies and procedures



25

SO4

Actions taken in response to incidents of corruption



25

SO5

Public policy positions and participation in public policy development and lobbying

-

SO6

Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

-

SO7

Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes



SO8

Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations



SO9

Operations with significant potential or actual negative impacts on local communities

-

Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities



70~75,

PR1

Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures



46, 49, 55, 56

PR2

T otal number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes

-

PR3

Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements



PR4

Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

-

no violations

PR5

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction



18, 19, 55, 56

PR6

Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship



54, 55

PR7

Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

-

PR8

Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data



PR9

Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services

-

Society

SO10

Product & Service

6, 14, 15

no violations 55, 56 no violations

APPENDIX

90

Organization Chart (As of July. 1, 2015)

President & CEO Safety & Security Management

Strategic Planning

Corporate Support

business Ethics & Audit

Passenger Business

Cargo Business Regional Headquarters

Human Resources

Commercial Affairs, Reservations & Ticketing

Regulatory Affairs

Corporate Support

Revenue Management

Public Relations

Finance

Sales Planning & Alliances

China

Purchasing & legal Affairs

Marketing

The Americas

Strategy & Planning

Cargo Sales & Planning Japan Cargo Services

Airport Services Europe

Maintenance & Engineering

Maintenance Quality Maintenance Engineering Maintenance Operations

Flight Operations

Operations Control

Cabin Service

Flight Operations Planning

Cabin Service Planning

Flight Crew Operations

Cabin Crew Operations

91

Third-party Assurance Statement

Dear Asiana Airlines Management and Stakeholders

Asiana Airlines has commissioned Korea Productivity Center(hereinafter “ KPC ” ) to provide third-party assurance on the 2015 Sustainability Report(hereinafter “the report”) of Asiana Airlines. KPC offers the following assurance accordingly.

them actively. Especially, the internal channels to communicate with executives such as ‘Fortune comes to a merry home’ and ‘Positive Communication Process’, and external channels such as SnS(Twitters etc.) and ‘Voice of Customers’ were considered to be very excellent.

■ Responsibility and Independence Responsibility for the information and opinions found in the report fully rests on Asiana Airlines. KPC is responsible for the opinions about the report. As an independent assurance agency, KPC did not participate in writing the report and does not have any kind of interest in Asiana Airlines which may hinder its independency.

• Materiality : Selection and Report of Material Issues Materiality principle is a principle which prescribes that an organization has to make decisions on material issues related to the organization and the surrounding stakeholders. KPC has confirmed that Asiana Airlines had selected material issues by materiality evaluation paying attention to the organization and major stakeholders of the organization. Asiana Airlines has done its best to draw material issues from its aspect of sustainability through various methods such as global initiatives, media analysis, conversations with stakeholders, management policies and benchmarking the companies of the same kind. As for the material issues which has been drawn, Asiana Airlines is considered to show the efforts of consistent management and improvement about the issues by presenting operation organizations, activities and performances of 2014, and future plans concretely. KPC also has confirmed that the items that had been drawn as material issues were reflected and reported on each page of the report in balanced manners.

■ Assurance Standards KPC has validated the report based on the Type 1 assurance engagement and Moderate assurance level in AA1000AS(2008) assurance standards, and confirmed the areas subjected to the principles of inclusivity, materiality and responsiveness in accordance with the AA1000APS(2008). KPC also applied the GRI G3.1 Guideline and ISO26000. ■ Limited Areas KPC has verified the performance of 2014 by the assurance standards above. Validation of credibility on some data such as financial performance, environmental data(e.g. the amount of greenhouse gas emission)and, information about internal system linkage are not included. As on the spot inspection is restricted to the headquarters in Seoul, the results can be changed when additional validation process is performed. ■ Assurance Methodology KPC has validated the report using the following methodologies

• Confirming the observance of principles in contents and quality based on the GRI G3.1 Guideline. • Examining stakeholders’ interest and sustainability issues • Inspecting the appropriateness in material issue selection and conformity of described • contents by media research and benchmarking analysis • Examining the appropriateness and error of contents described in the report by the • comparison and analysis of the other sources • On the spot inspection: Confirming the validity of important data and information • through the interview with the person in charge, confirming the internal process and system ■ Assurance Results KPC had reviewed the contents in the report and expressed its opinions on it, and corrected the report if necessary. KPC has confirmed that the report reflects Asiana Airlines’ sustainability management activities and the performance sincerely and fairly. KPC could not find any significant error or inappropriate description in this report during validation activities.

• Inclusivity : Participation of Stakeholders Inclusivity principle is a principle which prescribes that an organization let the stakeholders participate in the process of developing strategic measures for sustainability. KPC has confirmed that Asiana Airlines had continued various efforts to observe and improve the inclusivity principle. Asiana Airlines has integrated relationships with six major stakeholder groups(customer, shareholder/investor, government/related agencies, employees, partners, environment/society) and is running communication channels for each stakeholder group to communicate with

• Responsiveness : Response of Organization on Issues Responsiveness principle is a principle which prescribes that an organization has to respond to the issues that might be able to impact stakeholders’ achievements. KPC has confirmed that Asiana Airlines grasped major expected items which had an impact on stakeholders' achievements and performed activities to cope with them, and the contents were described in the report properly. Especially, Asiana Airlines’ efforts to reinforce the safety management in accordance with the increase of stakeholders' interest about safety issues, such as running a safety management system to ensure safety operations, offering specialty trainings, investment report on training facilities were considered to be a superior example of sustainability management compared to other companies. ■ Recommendation KPC has a high opinion of Asiana Airlines’ various efforts and performance on the reinforcement of sustainability. KPC recommends the following schemes for future reports and improvement of sustainability management.

• Control of Sustainability Management Target : KPC recommends that Asiana Airlines set its goal to achieve sustainability management visions and strategy, establish implementation plans to fulfill the goal, and report the performance regularly. KPC also recommends that Asiana Airlines reinforce the connectivity between non-financial performance(environmental and social activities etc.) and financial performance for the transition to an integrated management system that is able to create a synergy of management. • Reinforcing the Quantitative Data Management : KPC recommends that Asiana Airlines reinforce the quality of data and information by collecting and examining them regularly and resetting the estimation and reporting standard of each index through the introduction of a process for improving the quality of data and information. KPC especially recommends that Asiana Airlines make an explicit report about activities, changes in data and future plans for qualitative improvement and consistent management of environmental performance to take measures for emission trading which has great influence on aviation industry.

September , 2015

KPC Chairman & CEO

Hong, Soon-Jik Korea Productivity Center Sustainability Management Center is an assurance agency which is officially certified by Accountability, who has established AA1000, the global standards on stakeholder participation and assurance. KPC is qualified for performing its own assurance activities. As for the assurance members, they are well experienced experts in the field of sustainability management consultation and validation who have received specialized educations.

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